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♦ i
• I
1
CHINA'S
8USINESS METHODS
AND POLICY
BT
T. R. JERNIGAN
Ex Consul General of the United States of Afnerica at Shanghai, China,
LONDON
T. FISHER UNWIN
PATERNOSTER SQUARE, E.C.
1 904
or\
t.c
f
PREFACE
I have wished to find some of the elementary
principles which base and influence business
and social China and to present them without
unnecessary detail. With this in view the
following papers were written.
T. R. JERNIGAN.
Shanghai, China,
October y 1903.
\ :
AUTHORITIES.
. Chirol, Valentine ...
Colquhoun, A. R.
Doolittle, Justus
Gerrare, Wirt
Xiiles, H. A
Graves, R. H
pundry, R. S
Hluc, M
>tJart, Sir Robert
Hosie, Alexander
£neson, George
usse, Alexis
Le Comte, Louis
Little, A. J
Mayers, W. F
Martin, W. A. P.
Martin, R. M
barker, E. H
Smith, A. H
Vladimir
Von MOllendorff, P. G. ..
Williams, S. Wells
Yule, H
. The Far Eastern Question. i
. China in Transformation.
. Social Life of the Chinese.
, Greater Russia.
, China and the Chinese,
. Forty Years in China.
, China Present and Past.
. Chinese Empire.
. Essays on the Chinese Question.
. Manchuria.
. Reports on China.
. China in Decay.
. Memoirs and Observations.
. Papers on China.
. The Chinese Government. \
.. The Lore of Cathay. ,
. China^ Political ^ Commercial and Social.
. China.
. Chinese Characteristics.
, Russia on the Pacific and Siberian Railroads
, Papers on China.
, The Middle Kingdom.
. Travels of Marco Polo.
journals of the China Branch of tlie Royal Asiatic Society.
Reports of the Blackburn Chamber of Commerce, China Mission.
Reports of the Imperial Maritime Customs (China).
Full acknowledgement is made to the above authorities. I also-
wish, in this connection, to thank Mr. H. T. Wade, an old resident
of Shanghai, for material aid in the preparation of the papers on»
"Commercial Trend" and "Shanghai."
CONTENTS.
PAGE
Administrative System
...
• . •
...
I
Land Tenure
• . .
...
...
27
Sources of Revenue ...
...
...
...
42
Laws-Courts
...
...
...
60
^Money
...
...
...
n
^janiws ••• *•• *••
• . •
...
...
92
Guilds ••• •••
...
...
...
104
Imperial Household ...
...
...
...
120
Family Law
...
...
...
129
Commercial Trend ...
...
...
• . •
151
Interior Trade Routes
...
...
...
184 V
Educational System ...
...
...
...
201
Extra-territoriality
...
...
...
219
Strategical Positions ...
...
...
...
230
Consuls and a Consular System
...
...
240
Missionaries
...
...
...
254
Pacific Ocean— The Arena
. ••
...
...
273
;^estem Nations in China
. .'.
• . •
...
301
Policy
...
...
...
323
The Emperor — Power and
Restraints
...
344
Other Methods
...
...
• . •
358
Shanghai
• • .
• • •
•.•
377
Incident of the China-Japan War
...
. • .
407
ERRATA.
Page 6 line 13 for Genghis read Kublai
sinecure „ sinecurists
in „ is
can be „ of
There are a few words that should sound in the plural instead of
the singular and vice versa, but the reader will easily detect the
inadvertence.
6
line
13
12
it
8
120
)>
20
297
**
8
CHINA'S BUSINESS METHODS
AND POLICY.
ADMINISTRATIVE SYSTEM.
In some books on China it is written that
the Chinese .are a homogeneous and immutable
people, but the statement is misleading and
inaccurate, for although there are certain
characteristics which mark the Chinese type, it
is nevertheless true that there (j§,-a^ distinctio n
as marked between the inhabitants of the
Northernuand. Soittheiii piuviuces — o f Chin a as
there is between the inhabitants of some of the
nations of Europe, and in the serious matter
of religion and government the Chinese have
equalled, if they have not surpassed, not a few
of those nations in the capacity for upsetting
society.
The native of a Northern province can
neither Speak nor understand the bq^ness -^dialect
of the native of a Southern province, and vice
versa ; and if a judicial officer of Canton should
2 Chinds Business Methods.
be sent to Tientsin to hold Court, it would be
necessary for him to have an interpretUr, familiar
with the Tientsin dialect, to enabl him to
discharge his duties properly. The c ess of a
native of Peking is different from the dress of a
native of Canton, and clearly indicates that the
former is not an inhabitant of a Southern
province, as does the dress of the latter that he
does not hail from the North. Not alone is
there the distinction in dialect and dress, but
the dissimilarity in face, manner, and custom
impresses the traveller from a Northern to a
Southern province ; and there are customs
peculiar to some of these provinces which
regulate important functions of government, and
this is true with regard to the imposition of
taxes, the nature and interpretation of contracts,
and the collection of revenue.
The tribal government, under which the
Chinese first appear in history, gradually grew
into a vast feudal system, when ultimately the
whole system was centralized by the mastery
of a chief who declared, that as there was one
sun in the sky there should be but one ruler in
China. But the feudal system, thus destroyed
and centralized, did not combine to form the
civil and administrative unity which is often
attributed to the government of China. The
peculiarities of a tribal government and of the
Administrative System. 3
feudal system may still be traced in the
administrative system of China, and although the
conqueri g Manchus have ruled China for
centuriebiirthey have never been able to efface
such peculiatrities, but have tacitly recognised
them. If Russia has absorbed Poland, Manchuria
has not absorbed China ; and when the
Thibetan Lama predicted to the Manchu chief^
that he would conquer China and be seated
on the Throne at Peking, the prediction would
have been more complete had he told him that
his whole nation, its manners and its language,
would be engulfed in the Chinese Empire.
A people who allow themselves to be
easily influenced on other subjects do not change
their opinion on politics and religion, except
upon the strongest conviction, but the Chinese
have not been constant in religion, and on the
score of revolutions and the tragic overthrow
of dynasties, the revolutionists of Europe are
comparatively infantile in that art. In politics
they have as feverish a taste for change as a
profound indifference for religion, and these two
traits are leading in Chinese character. There
is no State religion in China and never has
been. It is true that' the writings of Confucius
have influenced and still influence the Chinese
mind as the writings of no other author, but
Confucius specially wrote in his books that he
4 China's Business Methods.
did not profess to teach that there was a life
after death or how that life was lived, as he
knew nothing of either, and therefore proposed
to teach how to live on this earth. The purity
of many of his rules and precepts have been
acknowledged by the ablest divines, but he
leaves the mind in darkness and without the
comfort of hope. Notwithstanding the reverence
in which the Chinese hold his writings, their
inconstancy during his lifetime was evidenced
by their division into two principal religious
sects, five or six systems of philosophy, and each
teaching a contradictory doctrine. Afterwards
came another creed — that of Buddhism — and
these several creeds have for centuries held
possession of an Empire which counts one
fourth of the human race. The divisions and
quarrels which, at various epochs of Chinese
history, these religious beliefs have given rise
to, have been long and tragic ; and while the
cultivated classes of China have been attached
to the Confucian philosophy, the multitude have
inclined to the superstitious practices of
Buddhism. It would be difficult to find
elsewhere than in China a people who could
adopt all these various creeds and philosophic
systems without troubling to reconcile them
with one another. After suflFering themselves to
be blown about by every wind of doctrine, they
Administrative System. 5
plunged into a religious indiflference from which
protestantism is endeavouring to arouse them ;
and the protestant missionaries need not be
discouraged by any belief that the Chinese are
an immutable or immovable people. But it will
be necessary, in the interest of the general
peace, to remember that the Chinese look to
the writings of Confucius as their code of morals
and principles, and this confidence in their
great Sage should be properly respected.
The social theories which have thrown the
public mind of some European nations into a
ferment, and which have recently engaged the
attention of the people of the United States, are
ancient in China. Centuries before Diderot,
D'Alambert and their associates wrote th6
encyclopaedia and published the social theories
which hastened the French revolution of 1789,
the Chinese scholar, Wangugan-Che, in the
eleventh century, composed a universal dic-
tionary into which he insinuated his own
opinions, and which, on comparison, it would
appear that those of the French writers were
mostly borrowed. The aims of both were
the same : they aimed to overthrow established
order; under any form of government such
writers would have been revolutionists, and
they succeeded for a time. The socialism of
the Chinese was a surrender of individual liberty
6 ChincCs Business Methods.
to the state, while that of the French was the
extreme phase of democracy. Both these social
theories produced revolutions ; both were put
into practice, and both failed, because the
distinction between liberty and democracy was
not observed, and popular rights and franchises
were sought to be extended and maintained
without regard to established order. In France,
the revolution ended in Napoleon becoming
Emperor ; in China, the revolutionists, being
defeated, fled the Empire to the deserts of
Tartary and joined the Mongol tribes in the
successful invasion that placed -Gepgbifr- Khan on
the throne of China. ^^" ' ' '
There is a period of twelve hundred years
in the history of China during which there were
fifteen changes in the dynasty, and the uprising
in the year nineteen hundred and the siege of
Peking are additional evidence that the con-
stancy and immutability of the Chinese, which
are eulogised by some writers, may be
reasonably challenged. But it is not intended
to combat the generally received opinion, that
the Chinese are strongly attached to their ancient
customs and laws, for that opinion is in the
main correct, though it would not be correct
to conclude that they were so organized, in
mental constitution, from all other races, as to
exclude the belief that, under strong influences.
Administrative System. 7
they were not susceptible of great and radical
changes.
Any attempt to understand the administra-
tive system of the Chinese government could
never be intelligent without bearing in mind
the pivotal fact, that f^^r\y prnvin^^fi AYiQfg a<^5in ^
independent_jinit ^riH is — sefficieSf unto itself.
There is a resemblance between that system
and the Articles of Confederation under which
the American Union was formed, and for all
practical purposes the provinces are as self-
existent as were the States under those Articles.
Y In theory, the government of China is a pure
^jNiespotism, but its administration is conducted
in accordance with many of the principles of a
democracy ; and this is why, in describing the
government of China, it is important to dis-
tinguish between what may be designated as the
unit of the Chinese Empire and the unit of
the Administrative System. The Emperor is thSl
head of the Empire, but the family is its base;
and thft fonndafion for the solidity of^ thA
forniei:. It is not, therefore, from the CentraT
Administration at Peking, but from the family
unit, that the building of the governmental
fabric proceeds.
It is to the single family that the numbe:^
of families is added which constitutes the^
village, and from the group, thus forming thd
8 Qhina's Business Methods.
village, a headman is selected as the arbiter of
disputes and the dispenser of justice. Proceeding
upward, a larger number of families constitute
a town, and the same custom of selecting
headmen applies to towns as to villages ; but
although usage and custom exempt the
inhabitants of the villages and towns from
official interference, the respective headmen are
held responsible and accountable for the order
and obedience of the inhabitants.
From the town to the distfict is another
step upward, but over the district, which is
usually composed of several villages and towns,
and is about the size of an ordinary county, an
official of the- government presides who is
known as the District Magistrate. As the
family is the unit of the Empire, the District
Magistrate is the unit of the administrative
system and the beginning of the official
hierarchy — the last connecting link between the
throne and the people. The duties of the
District Magistrate place him nearer to the
people than do the duties of any other official,
and his relations to them intimately concern
their welfare and bring under his immediate
supervision their daily life. The eighteen
provinces of China proper are divided into
about thirteen hundred districts, and this fact
makes clear the importance of the officer who
Administrative System. 9
presides over each, and who exercises the
responsible functions of an educational, judicial
and fiscal character.
After the District, comes the Department,
.which includes several districts and is presided
over by an officer officially styled the Prefect.
It is the earliest division of the administrative
system, and there are now about one hundred
and eighty departments. The duties of the
Prefect remove him farther from the people
than do the duties of the Magistrate, and the
Prefectiiral_ofl&ce is the Court of Appeal from
the Magistrate.
Ascending in official grade and administra-
tive division is the officer whom the Chinese
designate as the Intendant of Circuit, and the
division over which such officer presides is
formed by the grouping of several Departments,
and is the Circuit. To foreigners, the Intendant
of a Circuit is better known as the Taotai, and
it is this officer who sustains at the treaty
ports of China the more intimate relations
with foreigners. Of the eighty circuits of China
the more important are those of the principal
treaty ports, as all business, outside of the
territorial administration, and which relates
mostly to foreign affairs, is the special function
of the office of the Intendant or the Taotai.
Each province has its governor, but there
10 China's Business Methods,
are several officers grading between the
Governor and the Taotai, and these are the
Grain Intendant, the Salt Commissioner, the
Provincial Judge, and the Provincial Treasurer.
The title of each oflScer indicates his duties : —
that of Grain Intendant being the Chief
Controller of the Provincial revenue from the
grain tax, whether collected in money or in
kind ; that of the Salt Commissioner relates to
the revenue derived from the Provincial
Gabelle or Salt Monopoly ; and the offices of
Provincial Judge and Provincial Treasurer are
sometimes classed together as the two chief
Commissioners of the Provincial Government,
the one being a judicial Commissioner, and the
other the head of the Civil Service in each
province and treasurer of the provincial
exchequer.
Up to about three hundred years ago the
Governor was the officer of highest rank in a
province, but since that date two or more
provinces have been united under the executive
authority of an officer styled the Governor-
General, or, known better to foreigners, as the
Viceroy. The grade of the Viceroy is a shade
higher than that of the Governor, but he is
not always regarded as the superior official, for
in many instances neither of the two can move
without moving for the consent of the other.
Administrative System. 1 1
Both are cautious in issuing commands, and
when a command is issued, it is usually
qualified with the words : — ** But you will at
the same time await the instructions of His
Excellency the Governor, or His Excellency
the Viceroy, as the case may be/* The same
caution is observed when the Viceroy and the
Governor jointly memorialize the Emperor ;
both may join in the memorial, but if the
subject of the memorial is one of great
delicacy, and there should be doubt as to how
it might be viewed by the Emperor, the drafter
and signer are usually distinguished thus : — *' I
may add that your servant the Viceroy, or, your
servant the Governor, drafted this memorial."
If either of the officials is a Manchu, then
the word ** slave " is used instead of servant in
reference to that official.
In theory as well as in practice the
Viceroy is really the superior of the Governor,
and it is seldom that the latter antagonizes the
known wishes or purposes of the former. In
a few of the provinces the Viceroy administers
affairs without the intervention of the Governor.
The province of Chi-li, for example, is under
the direct and exclusive administration of a
Viceroy, and at Canton and Nanking the
Viceroys of the provinces, within the boundaries
of which those cities are located, directly
12 Chinas Business Methods.
supervene the salt gabelle, have control of
military aflfairs, and are the responsible agents
for correctly informing the Central Government
on subjects bearing on the relations between
China and the Western Nations.
But it should not be understood that the
oflScials, whose grades are between the grade of
the Taotai and the Governor, are sinecures in
the administrative system, for in routine matters
especially, they are not forgotten, and in civil
advancement they do not escape responsibility.
It often happens that, when the Viceroy and
the Governor submit a name to the Emperor
for promotion, the memorial mentions that the
candidate was nominated by the Provincial
Treasurer and the Provincial Judge, thus
showing that these two officials are not allowed
to escape accountabilility for what may prove
to have been an unwise nomination ; and the
unwillingness to assume responsibility and the
ever readiness to shift it is a striking feature
of the working of the system.
The main idea that runs throughout the
entire provincial organization is, that each
province is a state, as it were, in itself, the
existence of which is independent of any other,,
and the government of which, like that of
a village, is uniformly free from outside
interference. In its administrative orbit the
Administrative System. 13
movement is autonomous. The whole machinery,
educational, fiscal, judicial and penal is,
practically, independent. Under the authority
of the Governor the revenue of the province
is administered, its defense is provided for,
competitive examinations held, and other
functions of government exercised. The Central
Government refuses to interfere and is generally
silent, except when in a critical mood ; and it
is seldom that a Viceroy, although the superior
colleague of a Governor, takes part in the
provincial administration.
The appointment of the officers of the
Empire is the prerogative of the Emperor, but,
after a Governor has been appointed over a
province, if he is reasonably prompt in paying
the requisitions made against his province, and
in preserving the peace therein, he need not
apprehend intervention by the Central Authority.
And as a Governor has the privilege of
memorializing to the Emperor in his own name,
and, therefore, to directly report the conduct
of subordinate officials, so it may be written,
that as the District Magistrate is the link
which connects the people and the official
hierarchy, the Governor is that which connects
it with the Throne.
Having briefly viewed the Provincial
System, and seen that the Governor is, for all
14 China's Business Methods.
practical purposes, the immediate agent between
the Throne and the official hierarchy, logical
inquiry now directs to the Central Government
and how its aflfairs are administered. The
Emperor is the source of all power, but the
administration of the Central Government is
entrusted to two Councils, known as the Grand
Secretariat and the Grand Council, each having
its President, Vice-president, and subsidiary
board with the management of a separate
department.
The Grand Secretariat is of greater antiquity
than the Grand Council, and has been the more
important division of the Cabinet from early
times. Its composition consists of four members^
with two assistants, and, as aids, there are ten
learned men selected from the Hanlin College^
in addition thereto about two hundred secretaries
selected otherwise according to pleasure. The
duties of the Grand Secretariat are such that
the members sustain the closest official relations
to the Emperor; they submit to him all papers
relating to the affairs of the Empire, and
receive from him the instructions necessary, in
accordance with w^hich official edicts are
prepared; they keep the seals used for the
departments and documents, and are the officials
the Emperor more frequently consults and in
whom he mostly confides.
Administrative System. 15
The Grand Council is of later date than
the Grand Secretariat and was provided for in
1730. It is before the Grand Council that the
heads of the departments appear when the
Emperor is to be consulted, and it is less
ornamental than the Grand Secretariat, having
the more onerous duties to discharge, and
sometimes framing the edicts for the Imperial
signature. When the Grand Council was formed
the intention was to make it a far more
numerous body than it has ever been, but the
intention was abandoned under the belief that
fewer members would oftener speak with one
voice, consequently enhancing its influence, than
would a divided Council, which was to be
apprehended from a greater number. In theory,
both the Grand Secretariat and the Grand
Council have daily audiences with the Emperor,
and, in practice, this is probably necessary in
order to facilitate the transaction of the
business of the Empire, but in recent times
the Grand Council has succeeded, in business
importance, the Grand Secretariat, and has
become the Imperial Chancery or Court of
Appeals. Under the two Councils there are
six administrative boards ; each board has an
organized staff of clerks and is otherwise well
equipped for the business it was formed to
transact.
1 6 China's Business Methods.
The Civil Board has jurisdiction over the
mandarin or official class, regulating their duties,
pay, and promotion, the assignment of work
and the granting of leave ; and whenever the
Emperor confers posthumous honors or rewards
they are distributed by this Board. But such
recognition is oftener conferred on the living,
as the desire to please could then be more
substantially appreciated than if made to the
shade of the departed.
The Board of Revenue, as its name implies,
receives the contributions from the provinces
and disburses the payments of the administration.
And it is this Board which has the confidential
duty to perform of ascertaining the names of
the Manchu women eligible for the Imperial
harem, thus combining the functions of collect-
ing and distributing money and women, and
which has ever been a potent agency in
influencing the administrations of Governments,
and doubtless giving to the Board a far reaching
importance.
The Board of Rites is probably the most
important in this branch of the administrative
system, for a distinguishing feature in the
national character are ceremonies and ritual
observances, and these constitute the main
fiinction of the Board. The Book of Rites j
which contains fourteen volumes, is the statutory
Administrative System. 17
law for this Board, and the ceremonies for feast
days, and even the cut of a court jacket are
minutely described and must be as strictly
observed. There is no act of omission that will
bring a Chinese official as quickly under the
censure of a superior as to be careless in
official ceremony, and on court occasions, or
when the Emperor is travelling, to violate any
requirement of the Book of Rites invariably
results in the dismissal of the offending officer.
The Board of War should be the most
important, for in a despotic government the
soldier is the chief reliance of the throne, but
in China this Board has never succeeded in
preparing the Empire for defense against
external enemies nor security against internal
foes. Owing to the peculiar autonomy of the
provinces, each having, when it has any at
all, its own military organization, the Board is
really prevented from extending its authority
over China with the view of forming and
centralizing and controlling a military organiza-
tion. Even the garrison at Peking is a distinct
military organization, independent of the control
of the Board, as is likewise the Banner Army
of the Manchus and Mongols. The Board is
powerless to organize an eflfective army when
there is no uniform system, no single idea
governing, and the entire absence of co-operation.
1 8 China's Business Methods.
During several years, immediately preceding the
late war with Japan, China expended millions
of dollars to equip an army and navy, but
when war was declared, and the result of
the vast expenditures were put to the test, it
melted away like mist before the rising sun.
And it was not because the military material
was wanting in Chinese character, but because
there was no organization, no rallying point in
the military system, no one directing mind, and
an almost total absence of confidence bv the
soldier in his superior officers. To have a
military organization in China worthy of the
name there must be a thorough radical change
in the very thought and habits of the Chinese.
The Board of Punishment might be more
aptly described as a Court of Appeal. With
this Board are associated, at certain periods of
the year, the Censors and Court of Revision,
and when the three are combined they form a
Supreme Court for the trial of capital oflfenses ;
at other periods of the year there are six
minor courts associated, forming the complete
judicial bench of Peking, and for the purpose
of revising the punishments ordered throughout
all the provinces before placing them before the
Emperor for his approval.
The public works and expenses are
prerogatives of the Board of Works, and what-
Admtnistrattve System. 19
ever relates to the plans for buildings of wood
or earth, to the form of useful instruments, to
the laws of stopping up and opening channels^
and to the ordinances for constructing the
mausoleums and temples are under the
government of the Board of Works. The duties
of this Board are miscellaneous as the indicated
outline shows, but it will be difficult to find
anywhere in China any evidence that they have
been performed at all, and if the sanitary
conditions of Peking, where the Board sits, be
an example, no proof could be more conclusive
that it has no conception of what those duties
are, for nowhere on earth does such an
insufferable stench pervade the air as at Peking.
In travelling in China it is easy to see that na
attention is given to the repair of the waterways
of the Empire, and that the Grand Canal, a
monument to Chinese skill and industry, has
been neglected to the extent of greatly
impairing its usefulness and defeating the
object of the great mind that conceived its
necessity as a means of advantage to the people.
Before i860, there was no department of
the Government of China charged wiih the
transaction of business relating to intercourse
with foreign nations. It was not the policy of
the government to have intercourse with foreign
nations, but on the contrary to avoid it, and if
20 China's Business Methods.
not possible, to discourage it. But the pressure
of events compelled the abandonment of the
exclusive policy, and in i860, a special council
memorialized the Emperor upon the necessity
of deciding how foreign aflfairs should be
conducted, and providing for a department for
the purpose, and it was in consequence of such
memorial that a decree was issued in January
1861, commanding the formation of the new
department so generally known to foreign
governments as the Tsung-li YamSn . But
notwithstanding the decree, the unwillingness to
depart from what had been a cherished policy
is evident in the constitution of the new
department, which is not so much a separate
organization as the colour of a Cabinet formed
by the admission of memberg of other
departments, an unwillingness emphasized by the
fact, that for thirty years after the institution of
the Tsung-li YamSn its name does not appear
in the official records. When first organized
the Tsung-li YamSn consisted of three members,
but soon afterwards another was admitted, until
subsequent admissions have raised the number
to eleven. This department is closely identified
with the Grand Council, some of the members
of the latter often being members of the
former, and as a Taotai of a Circuit sustains
closer relations *with foreigners than any other
Administrative System. 21
official of the Provincial administration, so is
the Tsung-li Yamen, in the Central administra-
tion, the department addressed by the foreign
ministers at Peking on all subjects relating to
the intercourse between China and their
respective nations. This agency between the
Central and foreign governments is now known
as the Wai Wu Pu.
On all of the departments of the Central
and Provincial governments there are checks
and balances of a general character tending to
make one more or less dependent upon the
other and, in this way, preventing any very
important action without joint co-operation, — a
barrier to the weakening of the power of the
Emperor or to enterprises against the safety of
the Empire. But there is another balance
wheel in the system, the revolutions of which
are watched with solicitude and fear by the
whole Chinese bureaucracy.
This balance wheel is composed of fifty-six
men, known as Censors, who are distributed
throughout the Empire. They are the intended
sentinels to guard the Empire against official
disloyalty and corruption, and their duty is to
report to the Emperor whatever impresses them
as not comporting with dignity and justice in the
administration of the departments. The Censors
hold their positions for life and are not allowed
22 China's Business Methods.
to accept office or enjoy other emoluments
than those pertaining to their duties ; and having
once accepted employment they cannot change
it for any other, however better the preferment,
thus taking away the temptation to be partial
or the fear of losing their positions. These men
scrutinize the private and public lives of all
officials, and that of the Emperor is not exempt
from their scrutiny ; they are empowered to
report on what they hear and see, and evidently
can be very troublesome when so inclined.
There is no curtain thick enough to hide the
sacredness of the family circle from their
penetrating eyes, which even look into the
Imperial sanctum and confront the Emperor
with memorials of his social and official failures.
There are instances where Censors have suffered
the consequences of over inquisitiveness and too
outspoken complaints, but bodily punishment
is rarely infficted upon men who, by the
fundamental organism of the Empire, are to be
exempt from punishment and free in the
discharge of their duties ; and men wielding
the influence of Censors enjoy a self-protection
which the boldest do not care to interfere with,
though the suspension or disgrace of a Censor
has sometimes quickly followed a too searching
scrutiny.
In outlining the duties of the Board of
Administrative System. 23
War, it was intimated that the garrison at
Peking was a distinct military organization and
was independent of the control of the Board,
and the same principle of independent organiza-
tion rules in the civil government of the City.
Although Peking is located within the Province
of Chi-li, over which a Viceroy presides without
having to recognise a Governor for a colleague,
there is a separate administration for the
District of Peking, just as the district
of Columbia creates a special sphere for
Washington outside of Maryland and Virginia ;
and this is also the case with regard to the
northern or mountainous half of Chi-H, which
lies beyond the Great Wall, and which is
under the Superintendency of Jehol and the
Military Governor of Kalgan. The District of
Peking and that lying beyond the Great Wall
are strongly Mongol in flavor, and bear relations
to China proper as Algeria to France or Poland
to Russia.
Manchuria, the ancestral home of the
reigning dynasty, is divided into three provinces,
but these are organized mostly on a military basis
and are seldom considered in connection with
the eighteen provinces which constitute China
proper; and for the dependent territories of
Mongolia and Thibet there are no special regula-
tions provided for their government, nor any
24 Chinas Business Methods.
for the aboriginal tribes scattered along certain
parts of the frontier of the Empire and over
some of the Southern and Western provinces.
A practical illustration of the independence
of a province and the sovereign power of a
Viceroy was afforded during the Boxer uprising
in the year 1900. The Capital is alleged to
have been invaded by a frenzied and infuriated
soldiery that immediately gained control of
the Central Government and undertook the
direction of its policy. Soon the foreign
legations were attacked and the attempt made
to kill the ministers and all other foreigners
in Peking. But during all of this sanguinary
saturnalia the Viceroys of Southern and
Central China were industriously engaged in
entering into arrangements for the preservation
of peace in their respective Viceroyalties.
There is no satisfactory evidence that any of
these Viceroys ever moved in earnest to go
to the rescue of the Emperor to aid him in
establishing order. The ** Yangtsze Compact, "
which has been the subject of merited eulogy
and praise for farsightedness, was an agreement
between Viceroys, whose Viceroyalties included
the valley of the Yangtsze River, and the
foreign Consuls at Shanghai, that the Viceroys
aforesaid would remain in their Viceroyalties
and preserve the peace therein, and this
Administrative System. 25
obligation the Viceroys undertook and faithfully
performed. It is conceded that, by virtue of
the agreement, peace was preserved in many of
the provinces of China, and all just credit is
due to those who conceived and executed it ;
but the fact that a Viceroy could assume an
obligation of such a sovereign character and
carry it out, only proves the weakness of the
Central power when it does not accord with
the interest of a Viceroy and the peace of the
people of his Viceroyalty to recognize it. And
it is the division of China into so many
provinces, whose Viceroys and Governors
exercise the prerogatives of a sovereign, that
has rendered foreign life and property insecure.
If such sovereign prerogatives were denied to
the high provincial officials, and the Central
Government not allowed to shift responsibility,
as is too often done, upon the provincial
oflScials, but held to the strictest accountability
at Peking, there would be less disturbances and
greater safety for foreigners who come to China
to follow vocations permitted and guaranteed by
treaties.
When a foreign subject is the victim of
mob violence in one of the States of the
American Union, the Federal Government refers
all complaints to the State authorities for
justice, and a somewhat similar policy governs
26 China's Business Methods.
the Central Government of China when attacks
are made on foreigners in a province. The
policy is faulty, and it has been and is specially
dangerous in China. It is dangerous to foreign
life and property, and unjust to the Chinese
in that it licenses the rapacity and extortion of
provincial officials and hides from the Emperor
the injustice and oppression too often practiced
upon his subjects.
Land Tenure. 27
LAND TENURE.
It was Thomas JeflFerson who wrote that
the cultivators of the earth were the most
valuable citizens, because they were the most
vigorous, the most independent, and the most
virtuous. Mr. JeflFerson also wrote, that when
there was a surplus of population in the.
United States it should be turned to the sea,
because the American people should enjoy an
equality of right and be able to enforce it on
that element, and because artificers constituted
the class by which the liberties of a country
are generally overturned. It is certain that
the government of the United States has
recognized the necessity for a larger naval
reserve, and that there is difficulty in increasing
it on account of the scarcity of sailors; and
the healthy conservative sentiment of that
country has been represented by the class of
its population, which is engaged in the
cultivation of the soil, and among which there
have been no labor strikes and no riots to
<listurb the order of society.
In China, it is only necessary for the
traveller to be generally observant to be
28 Chinas Business Methods.
impressed that the cultivators of the soil are
the most contented and loyal subjects of the
Empire; and my purpose here is to give an
outline of land tenure in China, how a title to
land may be acquired, the protection afforded
the ovi^ner, and the security he has for
the enjoyment of the fruits of his labor.
According to the theory of the government
of China the title to all land is vested in the
Emperor, and he imposes taxes as he may
decree, and appropriates for public use and
without compensation whenever he chooses to
do so. But although the Emperor has such an
absolute power to tax and appropriate any or
all the land within the boundaries of his
Empire, the land is nevertheless parcelled out
among his subjects who, practically, enjoy as
undisturbed possession as do the people of any
nation. The deed is issued by the Local
Authorities, and if the holder pays the
assessments made by the government he may
sell or mortgage the land as conveniently as
can be done elsewhere under any law. The
average tax on land is generally moderate^
and while it may be increased at any time,,
the Central government seldom exercises any
despotic prerogative over the property of
Chinese that is not fully warranted by long
custom, and with their approval. With regard
Land Tenure. 29
to waste land, this can be entered by application
made to the proper authority, and, after it has
been entered, the same regulations which
govern in respect to other land are enforced,
and the land so entered may be sold or
mortgaged. The private lands of the Emperor,
such as the palaces, the imperial parks, and
pleasure grounds are exclusive, and are exempt
from taxation and free from all other burdens
of government.
There is a military tenure which entered
into the land laws of China after the conquest
bv the Manchus. It is similar to that which
William the Conqueror enforced when he
portioned a large part of England among his
followers. The Manchu conquerors partitioned
certain parts of China among their followers
and made grants to them for the lands thus
confiscated. Such lands are also exempt from
taxation, and while the condition of military
tenure does not so clearly appear, as it did in
the terms expressed in the grants of the
Norman conqueror, there was, however, an
implied condition that the grantees were to
render military service whenever it should be
required of them.
In China, those who occupied the land, at
the time of the grant of partitions, were
generally permitted to remain and pay rent to
<v^ ^ '' '■
30 Chinas Business Methods,
the new owners, but in some instances they
were driven off to make room for their con-
querors. The change brought with it many
hardships: rents were raised in proportion to
the extravagance or economy in living of the
new owners, and the greed and indifference of
a conqueror were substituted for the considerate
and liberal poHcy of the native rulers. At one
time the land which had been partitioned among
the Manchus could not be alienated, as this was
prohibited by the principle of military tenure,
but the rule has been relaxed, and much of
the land so held has been purchased by the
conquered from the conqueror, the Chinese being
more thrifty and provident than the Manchu§.
There is another tenure, different from
common tenure, and which is in the nature of
a grant to certain clans or families on the
condition of their guarding the frontier of the
Empire, or annually furnishing a certain number
of boats and men for transportation service-
The land so granted was not entirely exempt
from taxation, though the amount of the
assessment was much smaller, and it could not
be alienated outside of the families aflfected by
the particular service ; but the distinction has
practically disappeared, and now about nine-
tenths of all the property in the Empire is held
by common tenure.
Land Tenure. 3r
The method of transferring land, when the
purchaser wishes to acquire a complete title
from the owner, is by deed. The price being
agreed upon, the owner executes to the purchaser
a deed, in which is set forth his wish to sell^
together with a full description of the land,
and further, that having first oflfered the land to
his kinsman, who declined to buy, he therefore
sells it to the purchaser for the price named
because he needed the money. As in the case
of a marriage, the negotiations in this transaction
are also conducted through the agency of
middlemen ; sometimes there are as many as
eight or ten middlemen acting in one transaction,
and no prudent business man will pay his
money and accept a deed when there has been
less than two ; but, while the middlemen sign
the deed, they do not sign it as guarantors
of the title conveyed, but in proof that the
seller is what he represents himself to be, and
for the purpose of giving the sale the required
publicity. These middlemen have their com-
pensations by a commission, which they do not
neglect to have specially provided for in the
deed, and, if they are "old hands at the
business," they invite themselves to a feast,
prepared at the expense of the parties who are
directly interested, and as a finality of the
transaction.
32 China's Business Methods, .
All deeds are required to be registered at
the office of the Magistrate of the District in
which the land is situated, but before a deed
can be registered it must bear the seal of the
village Headman, called Tipao by the Chinese,
thus showing that the influence of the family
or clan runs through and more or less governs
all transactions in China. The purchaser pays
the expense of registration, and unless this
charge is paid the land may be confiscated.
The charge is nominally about three per cent
of the amount of the purchase money, but the
incidental expense, such as Yam6n fees, make
it amount to as much as five or six per cent.
The Chinese have a way of avoiding
the payment of the additional per cent by
understating the price. If three thousand dollars
should be the real price, that stated in the
deed will usually be not more than fourteen
hundred dollars, or the seller will execute two
deeds, one naming the price at sixteen hundred
dollars and in the other at fourteen hundred,
and both in identically the same terms, but
only one will be delivered to the Magistrate
for registration, while the other is retained by
the purchaser as a receipt for his money.
The proof that a deed has been registered
is evidenced by a piece of paper which is
gummed to it and called the ^* tail, " and on
Land Tenure. 33
which is written an official endorsement of the
transaction ; setting out the names of the
seller and purchaser, the location of the land,
the amount paid as transfer fees, and the
amount of the annual land tax for which the
new proprietor is liable. The deed thus
returned bears the impression in red of the
Magistrate's seal, and is known as the "Red
Deed,'* and is the highest form of title
obtainable. In some places the persistent
jevasion of registration has given currency to
unstamped deeds, which are called "White
Deeds,*' but these are always to be regarded
with suspicion.
It was once the custom in China, that
when land was mortgaged the mortgagee
immediately entered into possession and remained
in possession until the mortgagor redeemed it,
and there being no definite time specified
within which the redemption was to be made
much inconvenience was the consequence. The
mortgagor did not pay interest for the borrowed
money, but as soon as the amount was agreed
upon the land was loaned to the mortgagee
instead of the money. The principle of the
transaction was, that the money could not be
demanded back, but that the land could, and
hence reversing the legal order. But at a later
period, the inconvenience of the indefinite
34 China's Business Methods.
time for redemption, was remedied by a law
providing that the right of redemption could
be exercised within thirty years, unless some
other time was specified in the deed.
It would seem that the defect of a more
definite law, with reference to the mortgage of
land, was due to the custom, that in theory
the land was the heritage of the family or
tribe of which the occupant was a member,
and, therefore, could be the personal property
of such occupant only for the time being,
and, subject to the life interest of the
occupant, the family or tribe had an interest
in the reversion ; the theory was not so far
enforced as to forbid the actual occupant from
dealing with the land, for when in need of
money, he could borrow it on the land as
security, but in so doing he was bound to
respect the reversionary right of the family^
either by reserving the right of redemption or
by giving his kinsmen the first option to
purchase. But the theory in favour of family^
rather than individual, ownership, has felt the
influence of the spirit of modern commerce,
though even now, as has been seen, deeds
conveying land to absolute purchasers contain
the provision that the land was first offered to
the kinsman of the seller, who had been
requested to buy but had refused. A deed or
Land Tenure, 35
mortgage will be set aside by a Chinese Court
when it appears that it was made under the
pressure of circumstances, for an inadequate
consideration, and in a case of fraud.
If money is borrowed for a short time only^
and a mortgage given as security, the mortgage
need not be registered, nor need the property
change possession, but the title deed should be
deposited with the mortgage, or a memorandum
stating in full the nature of the loan. If the
terms of the mortgage are not complied with
the mortgage cannot be foreclosed without an
order of court, and if the proceeds of the sale
prove insufficient to pay the debt, it is doubtful
if an action can be sustained against the
mortgagor for the balance unless clearly
expressed in the mortgage. The land and the
money will be counted and considered as
equivalent, thus meeting the idea of a com-
promise, w'lich infliences the settlement of
nearly all controversies between Chinese.
At the open ports of China, foreigners have
the right to purchase land from the natives,
but the Chinese, instead of executing a deed
in the usual form, executes to the foreign buyer
a lease in perpetuity, which is registered at the
consulate of the foreigner, and without any
fee being charged by or paid to the Chinese
authorities. There are many wealthy Chinese
36 China's Business Methods.
who prefer to have their property under the
protection of a foreign flag, and, when this is
the case, a lease in perpetuity is executed and
the foreigner gives a private paper writing
showing the conditions of the lease. In some
cases the conditions are not in writing, but
the honor of the foreigner is relied upon as a
guarantee of compliance. The land so leased
sometimes appears on the official records as
the sole property of the foreigner, and, if he
is mean enough, it could be sold or mortgaged
to anyone who did not have knowledge of the
•conditions of the lease. There are at each of
the open ports certain lands set apart for the
residences of foreigners, and Chinese are,
prohibited from owning any of such lands, but
it is a fact that some of the most valuable
of such property is owned by Chinese, ^^ho
are investing largely in the industries being
inaugurated and conducted at the open ports
of the Empire ; the prohibition is avoided by
buying through the agency of a foreigner, who
takes the deed in his own name instead of
that of the real purchaser and owner, and the
Chinese buyer contents himself with the word
of his foreign agent, or a paper writing from
him, defining the nature of the purchase and
/ for whom it was made.
■sj The succession to property, real or personal,
Land Tenure. yj
is in the^ jnnle line, and, if— rireie la no— son,
then one may be adopted by the owner of
the property while living or by a family council
after his death, and the male so adopted
succeeds to the whole estate. If ^h^eM — be-
more t han one son the property is equally
divided, and they can agree among themselves
how the division may be made, or the parent
may make the division during his lifetime ; the
authorities need not be consulted, but, as the
eldest son defrays the burial expenses, he is
entitled to claim an extra or double share
of the estate ; if the estate is small the sons
usually live together, supporting their mother
and sisters, if any, and, when a part of the
land is sold, the purchaser should be careful
to ascertain how many may be interested and
have all to sign the conveyance. The sons of
a concubine, or an adopted son, inherit equally
with the sons born of the proper wife. In no^
case does^a^Pimalp inherit, except when there
is no male, either natural or adopted ; and the
succession is by operation of law and requires
no ratification by the authorities.
It has been stated in this chapter that the
tax on land was not oppressive, and that the
amount of the tax was settled by the custom
of the diflfe rent provinces. But, in the year
171 1, there was a decree fixing the amount of
38 China's Business Methods.
the land tax by providing, that it should be
levied according to the rolls of that year, and
that there should not be any extra levy
because of any increase of population. This
decree, however, referred to the land under
cultivation, as there was no tax on waste land
which, if it had never been under cultivation,
could not be taxed, although when under
cultivation was taxed as other cultivated lands,
and, therefore, as the empire prospered the
aggregate amount of the land tax became
larger. As the territorial unit, for government
purposes, is the District, so the land tax is
under the jurisdiction of the District Magistrate
who is the tax collector, the judge, and the
general administrator. And so long as he pays
the requisition of the Central Government his
methods of administration are not too strictly
inquired into. Invariably there is a surplus
from the land tax, because this is an accepted
perquisite of the Magistrate, but he is careful
not to publish the amount, though, should his
district be visited by any calamity, serious to
the industries of the people, there would be no
delay in publishing that fact to the attention
of the Central Government in a memorial for
aid. In theory the Magistrate should report
accurately the condition of his district, but the
theoretical and practical administrations are
Land Tenure. 39
often quite diflferent, and the provincial officials
are not accused of being unmindful of their
pecuniary interest.
It is estimated that about^jme half of th(>
soil of^China, — whkb — *9 uudci — cuUivaliim, is
tilleaby peasant owners, and that the other
half is owned by retired officials and their
families, the class known as the liteiati-^and thii
gentr^,_but this half is also mostly leased by
small farmers, as tenants at will from year to
year, and who pay as annual rent about one
half of the principal crops. If the soil is poor
the rent is not so large, but on most of the
cultivated land of Ch ina a rotation of crops are
raised, and these subsidiary crops belong to
the tenant, the principal crops being rice and
wheat.
As soon as a crop is harvested the part
belonging to the landlord is delivered to his
agent, who is generally present at the proper
time to receive it, and in ^onsequence there
is seldom any rent i n ^ri-ea r. When the
deficiency in the yield threatens the necessary
supply, the Central Government responds to the
situation by remitting all or part of the land
tax, and advises the landlord to abate somewhat
of his claim.
In the more populous parts of China the
land holdings are often less than an_
40, China^s Business Methods.
a cre, and seldom m nrf^ than — three — or — four
acreS| but on the frontier provinces, where
the soil is not so fertile and the population
more sparse, the holdings are much larger,
though the tendency is to reduce all holdings
to the size that will support a single family, a
thoughtful preparation for a steadily increasing
population. But the possession of a large tract
of land does not necessarily indicate wealth,
for by the family or clan law all the kindred
are interested, and at the death of the owner
it has been seen that there is an equal division
among the male heirs. T^jfi^Jitles—ef-'TT^ility
in China are not associated with landed
possessions, and as many of them are limited
to a certain number of lives, or to even one
life, the descendants within a few generations
become a part of the general body of the
community.
In some intelligent quarters the belief
prevails that China is over-populated. The
travellers along the seaboard and the great
waterways have written in their letters and
books that China was a "hive of human
beings," and that the soil was taxed to its
utmost producing capacity to support the vast
population. The belief is easily understood if
one journeys along the seaboard and principal
waterways only, but away from these
Land Tenure. 41
geographical points population rapidly diminishes
and one is in the midst of wide and fertile
plains and valleys. Trade has not penetrated
there, communication is wanting, and the
traveller who does not observe closely returns
and writes that the plains and valleys beyond
the seaboard and waterways are sterile, because
of the scantiness of the population. He does
not write accurately.
If the population of China be estimated at
300,000,000, it is only about nine times that of
Great Britain, while the area that supports it
is more than fifteen times that of the British
Isles, and this important fact is impressing itself
upon the commercial nations of the world.
The late Viceroy Li Hung Chang once
said, that the Chinese Empire' included land
enough for the home and the support of all
Chinamen, and that there was no necessity
for any to leave China because of the scarcity
of land.
42 China's Business Methods.
SOURCES OF REVENUE.
(.
The only direct agent of the Central
'Government of China, in the collection of the
revenue, is the Imperial Maritime Customs,
and this is superintended and managed by
foreigners. The Central Government has no
•direct agency in the collection of the internal
revenue of the Empire, for such revenue is
-collected and accounted for by the Provincial
governments, thus showing their quasi-indepen-
dence in exercising one of the most important
functions of government, as well as an element
of sovereignty, which it is strange an absolute
government should delegate. It is no less
strange that China, so long prejudiced against
foreigners, and as hostile to intercourse with
them, should entrust to foreigners the collection
of the maritime revenue ; but this contradiction
in the theory and practice of the government
is correctly illustrative of Chinese history.
The Board of Revenue at Peking, w^hich is
•charged with the supervision of financial matters,
makes up an estimate before the end of each
year, and, when approved by the Emperor, it is
apportioned among the various treasuries and
r '"
Sources of Revenue. ' 43
collectorates throughout the Empire as the sum
required for Imperial purposes. There is in
each province several of these treasuries and
collectorates, and the money collected by the
provincial authorities is deposited with them,
and remitted according to apportionments.
Whatever sums remain, after paying the
apportionments of the Central Government, are
disbursed in the discretion of the provincial
authorities for provincial expenses ; and should
there be any surplus, after paying Imperial and
provincial expenses, this also is a fund subject
to discretion. There does not appear to be
any annual adjustment between taxation and
expenditure, and it is doubtful if any province
-could show a complete balance-sheet on the
subject. If the apportionment of Imperial
expenses for any one year should be unusually
large for a province, the provincial authority
increases the taxes and pays the apportionment.
Taxes are seldom reduced.
A reference to the sources of revenue, and
a statement of the amount, will indicate the
financial strength of the Chinese government as
now administered.
The governments of all oriental countries
rely upon the land tax as the principal source
of their revenue, but in China the revenue
derived from the land tax is not so large as it
44 Chinas Business Methods.
was at the close of the eighteenth century^
although there is no reason why it should not
be larger, except that the collection and
accounting for it is left with the provincial
authorities who act about as they please. They
aim to keep on easy terms with the Board of
Revenue at Peking, and they succeed by
promptly paying the apportionments of that
Board. There are several publications which
purport to give the regular amount of the land
tax, but, by comparision, no two agree. In
1820, the amount was stated at 32,845,000
taels ; later at 30,762,000 taels, and later at
29,287,000 taels ; and if an average be made of
the three years 1892- 1894, it will not exceed
25,088,000. The provinces from which the
largest sums of land tax are collected are
Chili, Shangtung, Shansi, Honan, Kiangsu and
Szechuen, but Szechuen is the only province
of the eighteen showing any very decided
increase.
The salaries of Chinese officials are known
to be small and inadequate, and the decrease,^^
which appears in the published statements of
the land tax, may be possibly traced to some
official pockets, for there is evidence abundant
that the actual amount collected from the
people greatly exceeds the amount accounted
for.
Sources of Revenue. 45
Jamieson gives an example of Chinese
methods of levying taxes : — " The fees which
a certain junk chartered by a foreigner
was called upon to pay upon passing a
barrier amounted to 12,000 cash, equivalent to
7.50 taels. The charterer was not interested in
disputing the amount, but he wished to have
a receipt as a voucher for disbursment, and for
that purpose he applied to the native oflSce,
where he was tendered a receipt for 4 taels.
Failing to convince the officials that 4 taels
could not by any possibility be regarded as the
equivalent of 12,000 cash, when the market
value of the tael was about 1,600 cash, he
applied to his Consul, claiming a refund or
receipt for what he had actually paid. In the
correspondence that ensued the Chief Chinese
authority explicitly declared that though
4 taels was the proper charge (which, indeed,
was easily ascertainable from the tariflf) yet a
tael was not a tael in the ordinary sense of
the word, but was such a sum as would
enable the local authorities to lay down a tael
of the standard weight and purity at Peking,
and, consequently, included a meltage fee, loss
on melting, freight and cost of transmission,
and general office expenses, that all that turned
into cash meant, according to old-established
custom, 12,000 cash for 4 taels, consequently
46 Chinas Business Methods.
a receipt for 4 taels, the legal sum, was the
only receipt they could give. In other words,
the procedure simply amounted to this, that the^
cost of collection, as far as this particular
collection was concerned, came to nearly
100 per cent, that is to say, they collected in
all 7.50 taels, of which 3.50 taels were the
cost of collecting 4 taels/' ^
It is such a system that enriches the official
and makes the people poor, and it has been
going on for centuries, forcing the government
to borrow money, when an honest system
would pay all debts and leave a surplus.
But an example, from the same authority^
relating to the land tax, especially, will better
illustrate the system and prove the necessity for
a radical change before China can hope to
utilize even her present resources.
It is estimated that 200 cash a mow is a
fair average of the land tax on good rice land,
which would be equal to f tael an acre. If
the area of the eighteen provinces be 1,300,000
square miles, and one half of it, 650,000 be
taken as capable of producing good crops,
there would be 400,000,000 of acres on which
a land tax of 75 tael cents an acre could be
levied without causing distress, and this would
make a gross revenue of 300,000,000 taels. But
if the peasant should be required to pay only
Sources of Revenue. 47
25 tael cents an acre the revenue would thenr
amount to 70,000,000 taels, nearly three times
as much as the government now receives ; and
there is little doubt that the peasants pay
more than 25 tael cents an acre, leaving nearly
50,000,000 taels collected and unaccounted for
by the provincial officials, with the countenance,^
perhaps, of higher officials elsewhere.
Another source of revenue is from taxes
paid in grain, which is transported from the
provinces to Peking; and the transport admini^
stration is one of the principal subordinate
departments of the Government, maintaining a»
** army of officials and underlings " as do all
the departments, and to the loss of the
government. The cost of transportation is^
allowed to be 30 per cent extra and paid by
the taxpayer in addition to the proper tax,,
but in reality it is over 100 per cent.
A careful estimate shows that the value of
the grain remitted to Peking does not exceed
5,020,000 taels, and this amount includes the
commutation money sent in lieu of grain, but
that the amount collected from the taxpayer,
and which reaches the hands of the provincial
treasurer, is fully 6,562,000 taels. It is believed
that a fair adjustment of the taxation in kind^
and a proper collection and an honest return
would more than double the amount now
48 China's Business Methods.
received, and the taxpayers would not have to
pay any more than they now pay.
A very important item of revenue is the
salt tax. By treaty the importation of salt
has been and is now prohibited, and the salt
industry is exclusively a government monopoly.
For administrative purposes there are seven
salt circuits, each having its own source of
production, and the boundary of each circuit is
•carefully defined. The salt produced in one
circuit is not allowed to be sold or transported
into another; it would be smuggling and
subject the article to confiscation.
The general system of administration is
explained by Jamieson : ** The salt is produced
in certain specific districts along the coast by
evaporation or boiling from seawater, or it is
obtained from brine found in wells and
marshes in Szechuen and Shansi. There is no
restriction in the amount or mode of
production, but all the salt produced must be
sold either to government officials, who
establish depots for its storage, or else to
licensed salt merchants, who have acquired by
purchase the right to supply certain areas of
<:onsumption. The cost of production varies
considerably. At some places, especially round
the coast, where a supply is readily obtained
by evaporation, the cost is very small. In the
Sources of Revenue. 49
province of Fukien for instance, at Changkow
and Changtzin, which are large centers of
production, the cost is said to be i^^ to 2 cash
a catty (say /^d. per cwt.). In Chinkiang it
costs 3 to 4 cash a catty, and at Taku, in
the province of Chihli, it costs i to 2 cash.
In the Huai district the cost appears to
he considerably more, especially that portion
produced by boiling, and which is of better
quality. Here it is said to cost from 8 to 10
cash (say 0.65 taels per picul, or i^. jd. per
cwt.)."
The retail price paid by the consumer
will average from 25 cash to 60 cash a catty.
The consumer buys from merchants licensed
by the government, and the merchants are
then privileged to sell anywhere within certain
areas, or the salt is bought from the producer
by the government, and the government then
undertakes the transport and selling to
wholesale licensed dealers, or the government
sometimes undertakes the whole business and
supplies the retail trader direct.
There is an estimate made of the quantity
of salt likely to be annually consumed in each
circuit and warrants are- issued to cover the
whole amount. These warrants, when once
issued, may be used from year to year, and
are handed down from father to son, or may
50 China!s Business Methods.
be transferred for value. It is known that a
warrant of this character has been sold for as
much as 12,000 taels.
"These warrants entitle the holder to
buy at the government stores a specific amount
of salt. It is not reckoned by the picul, but
by a measure called the yin, which varies
a good deal in the various circuits. In
Huai-nan the yin represents 8 packages of 86
catties each, with a certain allowance for waste^
which actually makes them weigh 94 catties.
Each warrant entitles the holder to buy 500
yin. A warrant therefore covers 94 by 8 by
500 catties (3,760 piculs)/' (Jamieson.)
There is nothing produced in China so
guarded with official supervision as the salt
production, and not a pound of this product
is sold to the consumer that some ofiicial does
not receive the purchase money, or that it
does not pass the palm of some government
agent. The industry is, in every sense, a
government monopoly, and the consumer pays
for it.
A Chinese merchant actually engaged in
the salt business gives an example of the
mode of working, and although the example
refers to one area it is correctly illustrative :
"Supposing," he says, "you wished to engage
in the salt business, you must first get an
Sources of Revenue. 51
assignment of a warrant from one who wishes
to sell. There are roughly one thousand
warrants in circulation in the area, the present
selling price being about 12,000 taels.
Occasionally, but not often, new warrants are
issued by the authorities. Such a proceeding
is bitterly opposed by the old merchants as
tending to reduce the value of their stock.
Generally, therefore, the only way to get a
share in the business is to buy a warrant from
some • one who is lucky enough to be in
possession. Having got your warrant, you
present it at the head salt office at Yangchow,
and you are thereupon authorized to get
delivery of 500 yin of salt from the government
stores. The selling price is 1.20 taels per picul,
but there are various squeezes to be paid, so it
actually costs 1.60 taels. The cost of 500 yin
or 688 catties (that is 8 bags of 86 catties each)
at 1.60 taels per picul is 5,504 taels. You then
transport your salt to whatever market you
may select, say to the capital of Kiangsi
province, where it awaits its turn for disposal.
The selling price there is 3.20 taels per picul.
An allowance for waste being granted the
government stores, the yin will generally turn
out 752 catties instead of 688. The total
amount of the account of sales will thus be
500 yin or 752 piculs at 3.20 taels per picul
52 China's Business Methods.
(12,032 taels). This he deducts from the
account of sales, and then hands the balance,
7,784 taels, to the merchant, who, after
deducting his original cost of 5,504 taels, is
thus left with 2,280 taels as the profits on the
transaction, less, of course, his outlay for
freight, coolie hire, storage, etc. When trade
is brisk and each warrant can be used once
in twelve months or less, the profits are
exceedingly good, running up from 20 to 25
per cent., but, of course, when the salt lies
long unsold the profits rapidly sink. This is
an additional reason for the merchants opposing
the issue of new warrants. The more warrants
there are afloat the longer it will take each
individual to get one worked oflF."
The total revenue firom salt is estimated
to be 13,050,000 taels, and this sum would be
probably increased, with no additional hardship
to the consumer, if the government monopoly
was utilized in practice to accord with the
theory upon which the administration is
supposed to be based.
The likin tax is a new fiscal regulation
in comparison with the land, grain, and salt
tax. It was not in force before as late as
1853, but the Taiping rebellion had so exhausted
the treasury of China, that in 1861 the tax was
made general throughout the Empire and
Sources of Revenue. 55
collected wherever the authority of the Central
Government extended. It is as legal as any
other form of taxation, being imposed by
Imperial decree, but there is no form of
taxation in China more embarrassing to internal
commerce as well as obstructive to the
sending of foreign importations to the interior
markets.
Jamieson, who knows as much about
Chinese taxation as any foreigner, explains the
mode of collecting the likin tax : ** An
Imperial decree having been obtained
authorizing the levy of likin, the provincial
authorities proceed to establish a bureau
presided over by one or more officers of high
rank, and mark out all the places where
subordinate stations are to be placed. At each
of these wei-yen a small official is put in
charge, who is responsible to the head office.
The stations are placed at all the large towns
and along the main routes, whether by land or
water. The numbers and frequency depend on
the amount of trade, and the extent to which it
will stand the likin tax without being absolutely
strangled. At some places, as along the lower
parts of the Grand Canal, the barriers follow
one another at intervals of 20 miles or so. In
other places, where trade is scanty and the
barriers can be turned by detours, there are
54 Chinas Business Methods.
few, if any. A tariflf is arranged and is
supposed to be published for general information,
either from the merchants or officials on this
point. In point of fact, neither party seems
to pay much attention to the authorized tariflf.
Nearly all the boats are passed by a system
of bargaining, the officials ask so much, the
merchant makes a bid, and they haggle until
they come to terms. . . . Many regular
traders commute for a lump sum either for
the particular voyage or the particular trade."
The influence of the Guilds enters largely
into arranging the likin charges, and the likin
officials and the Guilds are on friendly terms
and have an understanding beneficial to the
possession of each.
The Piece Goods Guild at Shanghai is
known to have commuted all likin charges
on piece goods to Soochow for a number of
years, and this arrangement has fostered into
existence a monopoly that is fatal to piece
goods dealers who are outside of the Guild.
^VXvJ The likin regulations now in force provide
\ for two barriers, one the departure station and
the other the inspection station, and *'at the
first the duties are arranged on a basis of a
3 per cent, levy at each of the first class, and
at i^ per cent, levy at each of the second,
but now the tax has been increased to 3 per
Sources of Revenue. 55
cent, at each departure station and 2 per cent,
at each inspection station. The stations are so
arranged that goods, passing along any of the
recognized lines of tariflF, pass alternately a
station of each kind, beginning with the
departure station. On the majority of routes
there occur four stations, two of each kind, but
on several of the routes the last inspection
station is omitted." When there are more
than four stations on the route, along which
the goods pass in any province, the likin
within the province does not exceed 10 per
cent, on their assessed value. All local
industries are subject to the likin tax.
The amount of revenue yielded by this tax
is estimated at 12,160,000 taels. The likin
regulations are a serious hindrance to trade,
and should be abolished, China being allowed
by the treaty powers to increase the tariflF on
imported goods, thus placing the subject under
the control of the Maritime Customs.
The Imperial Maritime Customs, as stated,
is more directly under the control of the
Central Government than any of the other
sources of revenue. It is true that the foreign
Commissioner of Customs does not receive the
duties paid at his port of entry, but the
Commissioner must see that the duties are paid,
and into some bank selected for the purpose,
56 China's Business Methods.
and a receipt issued before the vessel is cleared.
The banks selected to receive the duties are
usually native banks, and these receivers make
returns to the governor or viceroy of the
province in which the port is situated, but the
returns of the Commissioner are a sufficient
check on the accounts of the native receivers,
and the Commissioner publishes his returns
every quarter.
It is estimated that the annual receipts
from the Maritime Customs now amount to
about 30,007,044 taels, and that about
four-tenths of the sum is appropriated directly
by the Central Government, and that from the
remaining six-tenths there is first paid out for
special indents in respect of the Central
Government, or provincial subsidies, which are
most specifically charged on the six-tenths; then
there are the local cost of collection and
numerous fixed allowances ; then 1 5 per cent,
is set apart for the expense of foreign
legations, and the balance is apportioned from
time to time between Imperial and provincial
needs.
The organization of the Imperial Maritime
Customs did not abolish the native custom
houses. The Maritime Customs only take
cognizance of cargoes carried in foreign bottoms,
and whether the foreign built ships are owned
Sources of Revenue. 57
by foreigners or natives is immaterial. At the
open ports, and at important places on the
coast and inland, the Central Government has
native custom houses, which control the trade
in the native junks, and levy a duty not
necessarily the same in average as the tariflF of
the Maritime Customs.
The annual revenue derived from the
native customs is estimated not to exceed
4,230,000 taels, but it should be a great deal
more. The number of the native custom
houses and the evident volume of the internal
traflSc would warrant the conclusion that the
Central Government should derive an amount
of revenue from this source more than several
times what it does derive. Like the likin
stations, there is a leak in the native customs
always open against the interest of the Central
authority and those who pay the customs dues.
A subdivision of the approximate annual
revenue of the Central Government is succinctly
presented by the following table : —
Taels.
Money land tax ... 32,000,000
Grain tax, value in money,
commuted or not ... ... 7,540,000
Native Customs 4,230,000
Taxes of all kinds on Salt, direct
or indirect 13,050,00a
58 China's Business Methods.
Taels.
Foreign Customs Collectorate .••
30,007,044
Likin, excluding that on Salt
and Opium
I2,l60,CX)0
Taxes on Native Opium and
Opium licences
2,830,000
Miscellaneous undefined taxes,
licences, fees, etc
2,165,000
Duties on reed flats
215,000
Rents on special tenures
690,000
Corvees and purveyances (roughly
valued)
110,000
Sale of Ofiices and Titles
266,000
Subsidies from other provinces
9,282,000
1 ea taxes ••• ••• •••
900,000
Fuel and grain taxes
110,000
Total ... Tls.
115,555,044
The above amount is small for an Empire
so large in area and population, and with such
varied natural resources, as the Chinese.
Under any system of administration that was
reasonably sensible and respectably honest in
practice the amount really collected as taxes
would, in a few years, relieve China of her
indebtedness. At present the most valuable
source of her revenue is mortgaged as a security
for debts due foreign nations, which i? in no
Sources of Revenue. 59
sense creditable to Chinese statesmanship or
financial capacity, and the complaints that go
out firom China, that the people are oppressed
by taxation to pay obligations due to foreigners,
may be true complaints against the Chinese tax
collector, but it would not be true if taxes
were properly imposed and faithfully accounted
for to the Central Government.
The companies which have been organized
to develop the resources of China, by means
of building railroads and the working of mines,
will prove the agencies for adding to her
wealth, but until the system of internal
administration is entrusted to capable hands and
administered, in practice as it appears in theory,
China will not be prepared to fulfil her duty
as one of the nations of the earth. With a
soil and climate favorable to the production
of all products known to commerce, the
thoughtless conservatism, which has for so many
centuries barred Asiatic progress, has ceased to
be tolerable, and Western nations are fully
within their rights in the decision, that China
shall not withhold from the needs of mankind
that which it is the duty of each nation to
contribute. The world moves and a nation, as
well as an individual, should keep step to the
music of its progress.
6o China's Business Methods.
LAWS-COURTS.
About twenty centuries ago one Li Kuei
undertook to codify the laws of China, and the
result of his research and labor is forty volumes
of laws, which are divided into four hundred
and thirty-six sections. Each volume is devoted
to a certain branch of the law and subdivided
Into appropriate divisions. It is a comprehensive
collection, systematically arranged, and clear in
statement and meaning. The whole is based
on the Chinese classics, which are the source
and foundation of all Chinese law, and the
standard of all rights, and the degree of all
punishments. They take the place of religion,
model the form of government, and define and
regulate authority.
The leading idea of the whole system is
penal, and it inculcates the necessity for the
strictest surveillance, and that an essential to
safety is,, that t h^ fami ly shall be responsible
for the acts of each and every member. And
thus the machinery of the government is held
together by a system of espionage, and not by
any great moral idea which persuades respect
and obedience for law without being moved by
Laws- Courts. 6i
the fear of a penalty. And such a pervading
idea may not be considered strange, when it is
remembered that there is not a character or a
word in the Chinese language which stands for
liberty or means liberty.
In addition to the fifty-six censors, whose
duty it is made to visit every part of the
Empire and report on the conduct of officials,
it is always doubtful how many more may
be similarly employed, and, in* consequence,
suspicion and distrust often destroy confidence
between neighbor and neighbor and sometimes
divide the family.jbr 4;he clan into bitter feuds.
But the sanguinary feature of the code is
the doct rine of family responsibility. It is of
undoubted proof, that only ^ar few years ago
an entire family were exterminated, because
of the misconduct of a member, and the cruel
deed was perpetrated within the sight of flags
which represented the cultivated and refined
civilization of Western nations. The young
and the old, whether male or female, are
responsible for the civil or criminal acts of
kindred, and the prejudiced eye and malicious
motive of a neighbor can easily, in reporting,
give to an innocent act the color of a grave
oflFense.
It would reasonably seem that a code of
laws, which enjoined such doctrines, would
62 Chinas Business Methods.
soon become of no effect by its own cruel
enactments, but in justice to China it should
be stated, that after centuries of experience
and trial it has proved effective as a preventive
to crime and suitable to the habits of thought
and customs of the Chinese race.
Because of the doctrine of family responsi-
bility, the authority of the parent over the
child is almost absolute, and this arises front
the necessity of the case, for if the parent is.
to be held responsible for the acts of his child,
it would be unjust to deny him the authority
commensurate with his responsibility. It is the
idea of par ental a ^^ ^^n l relatli^ Ti^ which is so
prominent in the classics, that introduces, not
alon^— kitTr the — family, — but — into — the— structure
of the government of China, its absolute and
despotic element ; and yet, at the same time,
it introduces an important element of democracy.
The absolute supremacy of the Emperor is
unquestioned, but the family, the village, the
clan, the neighborhood, the guild, each and
all exercise immense power and influence in
the administration of the law. Each of these
associations is organized and co-operate at times
to settle disputes, and, if necessary, do impose
fines, and have inflicted capital punishment.
And there is another democratic element, which
is composed of the gon^ry, who are influential
Laws- Courts. 65
men on account of their age and wealth, and
who command their position in society by an
admitted natural right. Still further removed
from the people, but also a bar to oppression,
are those who are in possession of rank,
though the influence of rank is measured by
the merit that wins it, and those who purchase
it do not exercise so great an influence as
those on whom it is conferred by reason of
their real merit. The family, the gentry, and
those who enjoy special rank are elements of
strength which no Emperor of China could
prudently disregard, and when combined would
materially shape and color the law and influence
its administration.
As the pervading idea of the code is penal,
it follows that there has been more time and
talent given to the exposition of criminal than
civil law, and it does not accord with Chinese
characteristics, for no people surpass the Chinese
in special aptness and inclination for mercantile
pursuits. For centuries China was not only
the Middle Kingdom, in the then geographical
sense, but the reservoir of trade for contiguous
nations, and it is unexplainable why there
has not been an equally comprehensive and
accurately defined code of laws on a subject
more in harmony with their favorite pursuit
and the genius of their nature.
•64 China's Business Methods.
In the Chinese code the principle of
caveat emptor means practically what it does
in American law. The inspection of a sample
is final, and if the goods delivered are similar
to the sample they are impliedly accepted with
all faults. If the fault is one that could not
reasonably be discovered the principle in
Chinese law is not thereby affected. There is
also a similar construction of the Statute of
Frauds, as is given in American law; the
contract for the sale of goods, however,
although reduced to writing, is not, by the
custom of Chinese, binding, unless earnest
money has been paid. The idea is one of rest,
and, like the Statute of Limitations, the practice
is to consider the retention of the bargain
money as a settlement of the transaction.
In a case which was heard in the British
Supreme Court at Shanghai, China, in which
a Chinese sued a foreign firm, a principle of
the law of broker and principal was discussed,
and the position of middleman, as understood
by the Chinese, was set forth : *' The case
turned upon whether one Chu Quai was treated
by the Chinese silkman as a principal or
merely as a broker in the sale of certain silk,
which the silkman entrusted to him, and which
was bought from him as principal, as contended
by the other side, and through him from the
Laws 'Courts. 65
Chinese, as maintained by the other. A
Chinese witness, who had acted as silk dealer
for many years, mentioned in evidence, as
showing the Chinese custom, an instance in
which he sold silk to a foreign firm who failed,
and he stated that, on the foreign firm not
paying, the silkman wanted him to pay and
did not apply to the foreign firm, but took
him before the Chinese authorities, who said
that the silk had been delivered to him and
should be paid for by him. He gave further
evidence that it was customary for Chinese
sellers to look, in the first instance, to the
middleman, and that as long as they trusted
him, the name of the principal did not appear,
but, if they could not obtain payment from
him, they then held to their right to fall back
on the principal. It appeared, that in the case
with regard to which the witness had been
taken into the City, the silk had not in fact
been delivered to him, but the authorities
decided that he was responsible for seeing that
the sellers were paid on account of the goods
having been entrusted to him for sale. This
statement was borne out by the general facts
of the case in which it was made, and the
ordinary course of dealing shows that the
custom, as here set forth, is actually that which
obtains among Chinese." In a similar case, if
66 China's Business Methods.
both plaintiflF and defendant are Chinese, the
custom is cognisant to both parties, but when
one of the parties to the suit is a foreigner the
necessity for certain fundamental principles of
law, to be fully understood as governing
transactions between foreigners and Chinese, is
specially emphasized. Now that the commercial
relations between China and Western nations
are extending geographically and in value, and
consequently in complexity and intricacy, the
interest of all concerned demands the
recognition of a code of laws more in
cognizance with the liberal spirit of modern
commerce. The doctrine of mutual responsibility,
which enters so potentially into every civil
and criminal provision of Chinese law, never
disputed the absolute binding force of a verbal
guarantee, until an insight into foreign law was
given by the administration of that law in the
consular courts at the open ports of China,
and in which foreign consular officials preside,
by virtue of the treaties between China and
Western nations; and the exceptions to verbal
guarantees is becoming better understood and
acceptable to Chinese reason.
I n the f ormatio n of a partner ship, and the
fixing of responsibility, the law of China is
not explicit. The custom is j:o seleet one man,
not necessarily a partner, to represent the
Laws 'Courts. 67
partnership, and with whom all transactions are
conducted, and the one, so selected and trusted,
is primarily responsible, and expected to
•discharge the liabilities of the partnership and
to undertake the collection and payment of its
If there is a dor mant part ner the law does
not hold such a partner liable, and no active
member of the partnership can be made to
pay more than proportionately to his share,
either the whole amount owing, or, if so
decided, a percentage of the amount, whatever
it may be. If the] man who is immediately or
directly trusted, and known first to those who
deal with the co-partnership, fails to pay the
creditors, they reserve the right to proceed
against the active members to the extent of the
liability of each as indicated. In a partnership,
where one of th e active members^ bsconds^ the
other members are required to deliver him up,
but if he cannot be found his family may be
held responsible ; and herein is seen, as in all
relations, the doctrine of i family responsibility.
When there are one or more sons, and there
is property remaining, any one may be called
upon to discharge the liability, or suflFer
attachment, if there is failure to discharge it.
But there is a distinction when the brothers
keep a separate ho usehold and when they live
68 China's Business Methods.
togethia"; in the former, the responsibility ceases
and the law does not compel payment, though
in the latter they are responsible and must
pay. If the debt is of a personal character
the surrender of the person relieves the family
of further responsibility ; but in debts to the
government the property may still be confiscated
in satisfaction.
While the principles of commercial law,
which have been indicated, show serious defects,
in this branch of the law of China, there are
still some which are recognized and rigidly
enforced by custom. But commercial transac-
tions give rise to so many different legal
shades that general principles, however strongly
grounded in law, rely for aid on the nice
distinctions made by equity for a just
application, and it is evident that there is a
pressing necessity for a commercial code which
the courts of China shall accept as applicable
to all dealings between foreigners and Chinese.
The want of such a code has been long felt
by the foreigners who have business relations
with Chinese, and such a code as will leave
no doubt as to the meaning of the law of the
place where a contract is made, and the effect
to be giv^n to special agreements.
If the administration of the law by Chinese
courts be examined it appears simple and
Laws 'Courts. 69
practical. Suits are commenced by a petition,
in which the cause is stated, and there are
certain days in every month for receiving
petitions, but probably this is a rule with
exceptions, though it shows regard for system.
There being no professional lawyers in China,
the petitions and other papers that may be
necessary in the suit are prepared by a certain
class who make it their business to prepare
legal documents, and, while filling an important
vocation, are looked upon with disfavor by the
officials. The petition and other documents
must bear the seal of the Tipao, who is an
official of the lowest rank, but an important
official, as in his person the official class seem
to come in real contact with the people, being
the small nerve from the government which is
lost among the people.
The seal of the Tipao authenticates the
party and offices testifying to his residence.
When the petition has been properly stamped
with the seal of the Tipao, it passes through
several hands and is copied before it is
presented to the magistrate; but there are
certain cases when the petitioner is permitted to
appeal directly to the magistrate by going to his
office, or by handing him the petition as he passes
through the street, a privilege, however, that
is only indulged when the case is of a serious
70 China's Business Methods.
criminal nature, for in common matters it would
be a breach of law to thus approach or accost
the magistrate. If the petitioner s interest will
be better served by presenting the petition on a
day other than the regular days, the payment
of an extra charge will help along the progress
of the document. If the petitioner is a woman^
or a member of the gentry, the representation
is by proxy, usually by a servant of the family^
and sometimes by a paid agent, but if the case
is lost the petitioner must appear in person.
After the petition is examined by the magistrate,
it is sent to a certain board of the magistracy
and the defendant is summoned to appear. The
petition is generally answered as soon as the
defendant has notice of it, and the answer takes
the same course as the petition. It is not
customary for the defendant to appear; he is
summoned to appear and the police are ordered
to arrest and bring him into court, but if he
pays a sum satisfactory to the police, as is
sometimes done, they report he is not to be
found. This custom is successful to a certain
limit and is occasionally winked at as a
perquisite of the office of a Chinese policeman.
In criminal cases, the criminal may be
arrested and delivered to the magistrate by one
of the gentry with the proofs of guilt or
reasons for suspicion. When the commission of
Laws -Courts. 71
a crime has been brought to the knowledge of
the magistrate, and the criminal has escaped
detection, the local officials are often held
responsible, under a threat of degradation, if
the criminal is not produced. If the crime is
very serious, a large sum of money may prevent
full investigation. The principal of mutual
responsibility here appears in its barbarity: when
a high official of a province once gave orders
for the destruction of a whole village if a
noted criminal was not delivered, the community
or village being considered by custom as
"cities of refuge" as well as accountable for
the peaceful conduct of the members or
inhabitants.
If the party arrested pleads **not guilty,'^
he may be released on satisfactory bail, and,
if the bail is given by one of the gentry,
it argues favorably in behalf of the arrested
party. If the offender is convicted of a serious
offense, the one who stood his bail commits
an offense by that act, and is responsible for
the appearance of the offender in case of a
fresh charge against him. But many cases,
civil and criminal, are referred to the neighbors
of the litigants or the accused, and when they
are unable to finally adjust matters, or refuse
to become bail, the case comes before the
magistrate greatly prejudiced.
72 Chinas Business Methods.
The material distinction between Chinese
and Western criminal jurisprudence is seen in
the trial of the accused. The great safeguard,
that the accused is presumed innocent until
proven guilty, is reversed in China, and he is
supposed to be guilty. The parental theory
follows him into court and denies him the right
to counsel, as a parent would not admit an
advocate for his son who had offended him.
The trial is not to decide whether the accused
is guilty or not, for his guilt is assumed, but
to determine the nature of the crime and the
degree of punishment to be inflicted; and as
confession is necessary, in order to settle the
case, if the accused will not confess, he may
be tortured until he does, just as a parent,
who assumes the guilt of a child, punishes it
until it confesses.
The accused is brought into the court and
made to kneel before the judge ; he has no
advocate to speak for him ; on each side are
the police with the instruments of torture, and
the magistrate addresses him in a threatening
tone; he is cross-questioned in accusing language,
and the whole machinery of the court is in
appearance most unfriendly. Confession is
followed by punishment ; if he does not
confess there is the torture rack before
him, and the magistrate can apply it within
Laws 'Courts. 73
his discretion. The policy is to discourage
litigation by the severe aspect of the judicial
machinery.
As to the practice of torture to extort
•confession, there can be no doubt, nor can
there be any doubt that it is permitted by the
•code. The following provision from the code
legalizes torture in China.
'* It shall not, in any tribunal of government,
be permitted to put the question by torture to
those who belong to any of the eight privileged
classes, in consideration of the respect due to
their character ; to those who have attained
their seventieth year, in consideration of their
advanced age ; to those who have not exceeded
their fifteenth year, out of indulgence to their
tender youth ; nor, lastly, to those w^ho labor
under a permanent disease or infirmity, out of
<:onsideration for their situation and sufferings.
In all such cases the offense of the parties
accused shall be determined on the evidence
of facts and witnesses alone."
The exceptions in the provision quoted
•clearly establish the rule, and there is an
Imperial edict which explicitly directs that *' in
cases where the use of torture is allowed, the
offender, whenever he contumaciously refuses to
confess the truth, shall forthwith be put to the
-question by torture, and it shall be lawful to
74 China's Business Methods.
repeat the operation a second time if /lie' still
refuses to make a confession/' /
The confession, that torture is applied ta
extort, is such a confession that conforms to
the facts as prejudged by the magistrate. These
prejudged facts are accepted as true, and if the
oflfender refuses to admit them as true, he is
taken to the torture chamber and tortured until
he does admit them. Torture is not now-
practiced as formerly; the injustice is being
admitted and its abolition may soon follow.
The right of appeal is recognized. The
appeal is from the lower to the higher courts,,
from district to department, and in order
through the grades of provincial office up to-
the Governor-General or Viceroy, and thence
to the Capital.
The punishments described in the code are
of four kinds; (i) Beating with large and small
bamboo ; (2) Banishment, one having reference
to time and the other to distance; (3) Strangling;
(4) Decapitation.
The punishments are severe in infliction,,
and often in degree, comparative with the offense,
but public opinion in China is educated to
believe that severe punishment is a necessary
preventive to crime, and even torture has not
been condemned by public opinion. The
immense population of China, and the absence
Laws 'Courts. 75
of a proper system of morals and religion^
threaten the safety of society and leave it
without those moral shields which are a better
protection to life and property than the most
sanguinary codes.
At the open ports of China, and contiguous,
thereto, the infliction of cruel punishments is
not so frequent. It is clearly observable that
the Chinese, who come in close and constant
contact with foreign residents, appreciate the
humanity and justice of Western laws more
than their countrymen who do not enjoy such
advantages, and regard the common law of
England as the model of judicial excellence and
fairness, and appeals to it are sometimes made
by Chinese officials to solve questions that grow
out of commercial intercourse with foreigners.
Note. — At one time, if not to the same extent now, it
appears from the sections of the penal code hereafter quoted, that
slavery was general in various parts of China, and, it is stated
upon high authority, was specially so in the Southern provinces.
Section 314 of the penal code decrees, that in case of theft or
adultery committed by a slave, if the master or one of his near
relatives secretly beats the slave to death, instead of informing the
magistrate, this master or his relation shall be sentenced to receiv^e-
one hundred blows. If the master of a slave, or the relation of a.
master in the first degree, intentionally kills this slave, or beats him
to death; the slave not being guilty of any crime, the delinquent
shall be punished with sixty blows and one year's banishment. The-
family of the slave killed have a right to be affranchised. A master
76 China's Business Methods.
can beat his hired servant without being punished ; but if he kills
him he is punished by strangulation.
Section 322 relates to a master who strikes his late slave, and
reciprocally. Both shall be punished as equals, the tie between
them having been broken by the sale of the slave; but if the
master has freed his slave, his right is not transferred to any
•other, and thus the sentence is pronounced as if the slave had not
been set free.
Section 328 provides against abusive language from a slave or
hired servant to his master or his relations. If the words are
addressed to his master, the slave is punished with strangulation.
If they are addressed to the relations of his master in the first
'degree, the slave receives fifty blows and two years banishment. In
all cases the language must have been heard by the person so
insulted, and such person must always complain of it publicly.
As evidence of the existence of the practice of infanticide to
a serious extent at one time in China, Lieutenant-Governor Ke,
of Canton, issued to the people of Canton, on February 19th, 1838,
ithe following proclamation : —
"Whereas heaven and earth display their benevolent power in
giving existence, and fathers and mothers exhibit their tender
affection in loving their offspring ; it is, therefore, incumbent on
you, inhabitants of the land, to nurse and rear all your infants,
whether male or female. On inquiry, I find that the drowning of
females is quite common, and practised by both rich and poor.
Had there been no mothers, whence would you have obtained
your own bodies? If you had no wives, where will be your
posterity ? Reflect : consider what you are doing. The destruction
•of female infants is nothing less than the murder of human beings.
That those who kill shall themselves be killed, is the sure
retribution of omniscient Heaven. And you, elders and gentry,
ought by exhortations and kindness to prevent the destruction of
human life. Hereafter no clemency will be shown to such
-offenders : so give heed to these instructions."
Money. 77-
MONEY.
It appears to be quite authentic that there
was paper money in China as early as the year
119 B.C., and that its character was impressed
on pieces of skin or some kind of a paste-board
about a foot square; but in A.D. 807, the
currency was more regular, though copper was
used for coining only, while for contributions,
which were obliged to be made for the treasury,
voluntary money was issued.
In A.D. 960, it is in evidence that there
was some kind of a ** sub-treasury" plan, such
as the populist party in the United States
advocated several years ago, for notes were
issued on goods deposited in the public treasury,
which were called accommodation paper. These
notes were negotiable, and were imprinted on
paper a foot square, with their current value
and an official seal stamped on them. Subse-
quently, when the iron currency, which was
in circulation, become inconvenient, it w^as
replaced by a system of checks, and, about
the tenth century, a system of banking was
introduced, when bills of exchange were issued
payable every three years. In the eleventh
78 China's Business Methods.
-century the public creditors were paid by notes
of varying value, and, at the close of the
century, it has been estimated that such notes
were issued to the extent of 28,000,000 ounces
of silver. \^As each province issued its own
paper money there was, consequently, much
■confusion in business, and this custom, which
permits a province to exercise privileges that
should be the sole function of the Central
•Government, has too often embarrassed the
trade of the Empire, and will continue to do
so until the privileges of the provinces are very
much abridged. )
( About A.D. 1256, paper money was issued
by the Emperor Kublai Khan, Marco Polo
describes it as having been made from the bark
of a tree on the leaves of which the silkworm
feeds. The bark was stripped from the tree
and was soaked in water, after which it was
put into a mortar and pounded into a pulpy
consistence, and then made into a paper of a
dark color, which was cut into oblong pieces
of different sizes and of different values. The
notes so issued were signed by special ofiScers
and stamped with the Emperor's seal, which
gave value to them, and the penalty for forgery
was death. This paper money circulated
throughout the Empire; its purchasing power
was sustained and extended by the authority of
Money. 79
the throne, and when such notes were damaged
by use they were exchanged at designated places
for new ones at a charge of three per cent. The
holder could obtain gold or silver in exchange,
provided it was for the purpose of having
the bullion manufactured into ornaments. The
soldiers of the Empire were paid in these notes^^
During the Ming dynasty, Martin mentions
a note which was issued bearing the following
inscription : — " At the petition of the treasury,
it is ordained that paper money thus marked
with the Imperial seal of the Ming shall have
currency, and be used in all respects as if it
were copper money ; whoever disobeys will have
his head cut off."
When the Moguls were in power in China
the Empire, figuratively, was flooded with paper
money, and so valueless had it become that, at
the time they were defeated and driven out,
business was in a chaotic state.
But under the Ming dynasty paper money
was revived, and notwithstanding the decree
making it a capital offense not to receive it,
and forbidding all traffic in gold or silver, the
value of the paper notes steadily declined. In
1455, another effort was made to sustain the
value of the notes by decreeing that all taxes
should be paid in paper money, but it failed
in the desired eflFect, and the notes ultimately
8o Chinas Business Methods.
passed out of circulation, the people since
refusing to trust the government with the issue
of paper money.
And so it appears that a test was made,,
centuries ago in China, of the value of **fiat
money," and that it signally failed. Having no-
substantial basis, such money could not fulfil
any legitimate function in trade, as there could
be no assurance of merited returns for honest
industry.
If China has any national currency, the coin
that represents it is known as the cash ; and
this is a circular coin, rather morV l:han an
inch in diameter, with a s(juani_hole in the
middle for the convenience of stringing. It
should consist of an alloy of copper, 50; zinc,.
414 ; lead, 6| ; and tin, 2 ; or of equal parts of
copper and zinc. Each piece should weigh
58 grains of troy, or 3.78 grammes ; but these
standards of composition and weight are not
free from counterfeiting, and the cash in
circulation would not generally measure up to
them.
And so defective is the monetary system
of China, that there is no uniformity in the
[/' value of cash. L In some provinces a Mexican
dollar will buy as many as 1,000 cash, and then
often in an adjoining province it will not buy
more than 800, while in another province the
Money. 8i
same Mexican dollar will buy as many as 1,200
cash. . ^^"--^
The value is not fixed by the intrinsic
worth of its purchasing power in any market,
but more by the locality and disposition of the
buyer and seller. But for centuries the cash
has been and is now the money of the Chinese
and is used by them in nearly all retail
transactions.
But in larger transactions the tael, abou t S
one ounce of silver, is the standard of value^
and probaHly Is the main standard by which the
Chinese govern their business, but the tael also
has a varying value according to locality, and
at no treaty port of (JIhina, nor in hardly any
province, is the value the same. The Imperial
Maritime Customs of China has adopted the
Haikuan tael for the payment of all customs
duties, and by which to measure the value of
all imports and exports. This Haikuan or
Customs tael is supposed to weigh 581.77 grains
of troy ; its value, however, annually fluctuates,,
as in 1895 was 35. 3|^., while in 1896 it was
35. 4^^., and therefore the receipts from the
customs may be more apparent than real,,
emphasized by the fall in the price of silver
since 1872 and the decline in exchange value.
Large payments are frequently made in sycee,,
w^hich is an ingot of silver of about the value
6
82 China! s Business Methods.
of ten taels, and known as a ping, while about
fifty taels in value would be called a shoe,
because of its resemblance to a Chinese shoe.
Now that the commercial treaties between
China and many of the Western nations are
being revised, with the view of facilitating
commercial intercourse, it will be necessary for
China to also revise her monetary system. So
long as a Viceroy of one or more provinces
can establish a mint and coin money there can
be no uniform currency in the Empire, and
trade will continue to be deprived of the
one essential to its vitality. There can be no
confidence in business enterprises when there is
no fixed standard of value for the money in
circulation, and the closer relations now being
cultivated by the Chinese with Western merchants
have at last awakened the Central Government
of China to the important fact. An edict has
recently been issued appointing commissioners
to at once consider the ways and means of
providing China with a uniform currency
system, and this is a move in the direction
of establishing a sound principle of business, for
when this principle, always so vital to healthy
trade, is made effective, it will point the way
for the necessity of removing other barriers and
hindrances to the proper development of the
internal trade of the Empire.
:\
Money. \c, .\ 83
There is a book written by a Chinese on
the money that has been current at diflferent
times in China, which has been translated, and
the author shall tell its history, but for a better
understanding it must be remembered that a
Chinese pound is twenty ounces: —
'* Formerly gold and silver were current in
China as well as copper, and some of the
emperors permitted the use of foreign money
throughout the Empire. There was also money
made of tin, lead, iron, and even baked earth
on which figures and characters were imprinted.
After the reign of Han, a prince caused money
to be made of sealed earth united with a strong
glue, and taking it in his head to put down
copper money he gathered as much as he could,
buried it very deep in the earth, and killed the
workmen who were employed about it, that
none might know where it was hidden. Certain
small shells have likewise served instead of
small money, but not for any long time.
**As for the form of money, it has been
different under different reigns. Copper has
long been round with a square hole in the
middle, edged with a border a little standing
out. This hole was made that they might be
strung and carried about ready told by thousands:
every hundred is separated by a string twisted
in the shape of a cutlass, another sort resembles
84 China's Business Methods.
the back of a tortoise, another of the form
that is seen engraved on plate, and was five
inches long and pierced at the top. At one
time there was a money called grandee's eyes^
and when handled were in danger of being
broken: they were so small that no less than ten
thousand were required to buy a measure of
rice sufficient for nourishing a man ten days,
but they were soon laid aside because people
would not have them.
** Stamps upon coin has no relation to the
prince upon the throne, because it would be
indecent and disrespectful that the image of
the prince should constantly pass through the
hands of merchants and the meanest of the
people.'*
There are native banks in nearly every
city, town, and village in the Empire, and
such banks issue notes of their own which
circulate in the respective localities and materially
add to the circulating medium. In addition to
the notes issued by the native banks, there are
foreign banks at all the principal treaty or
open ports, which are authorized by their
charters to also issue notes, and, in addition,,
still, there is the Mexican silver dollar, which
circulates in almost every province and is known
in every mart of trade. The supply of money,
such as it is, with its fluctuating value, is
Money. 85
sufficient to meet tlie ordinary demands of
business, but what is most needed in China,
for developing her internal resources and
giving confidence and certainty to her trade, is
a standard currency of uniform value throughout
all the provinces of the Empire. The necessity
for such a currency is constantly experienced
in business transactions, and, without it, no
business man, however farsighted and experienced,
can intelligently forecast the trend of trade,
accurately calculate results, or reasonably
provide against losses. It is hoped that the
Central Government intends to earnestly consider
this important subject, and that foreign
governments will appreciate the bearing it will
have on foreign enterprises in China by a
judicious adjustment.
SUGGESTIONS CONCERNING A UNIFORM CURRENCY.
By Sir Robert Hart, Bart., Inspector-General of I. M. Customs,
China.
Presented to the Waiwupu (Board of Foreign Affairs),
I. — While the various countries of the world possess a gold
standard, China at the present day is still without it and yet
continues the use of silver money. It is not because other countries
have no silver money, but since gold began to have a steady value
regulations were made for a fixed ratio between gold and silver.
China not only has no gold currency but her silver money, even,
has no uniform weight or appearance, nor has she a fixed ratio
86 China's Business Methods.
of exchange between the two metals, so that, whenever there is
need for gold it must be obtained at market rates. For this reason
people in China labour under the diflSculty of fluctuating rates of
exchange at various hours of the day. Moreover, the silver dollars
in use are limited in number, the balance of the currency being
largely made up of silver ingots and lumps. These lumps and
ingots of silver are merely so much silver in the mass, and in
the barter for goods are much inferior to the silver dollar. During
the past twenty to thirty years the output of silver mines has been
exceedingly great, and much more than is needed for use by the
various countries of the world, and it is increasing from year to
year so that silver has become cheaper and cheaper, and the purchase
price as compared with gold, gradually less and less. Hence it
would be much wiser for China to maintain a gold standard instead
of a silver one as at present, since silver has dropped down to such
a degree, and moreover possesses no certain or uniform exchange,
even within the limits of a single day. The hundreds of trades are
all disastrously affected by the present state of the currency, while
the Government, having to pay its foreign debts in gold, both
country and people are being plunged into the depths of financial
distress. The conditions pictured in the foregoing, therefore, compel
one to seek some plan whereby they may be ameliorated, and so
make it that China, while still using a silver currency, shall so fix a
uniform exchange between silver and gold that there may be no
danger of uncertain fluctuations. With this object in view I now
proceed with my suggestions.
2. — If the Chinese Government possessed a large quantity of
gold this metal might be struck into gold coins, and then a fixed
exchange could be decided in their relation to silver money. This
naturally would be an easy matter to put into force. But when
we have no gold and only use a silver and copper currency, it
becomes incumbent upon us to decide upon some method to bring
about a fixed ratio of exchange between gold and silver. If it
could be possible to dp this by making only slight changes in the^
old methods of exchanjg^e, so much the better, as it would obviate
the necessity of making the people suffer on both accounts. When
there is no gold, and yet it is determined to maintain a fixed
ratio of exchange between gold and silver, it is necessary to
Money. 87
create a silver currency of a uniform weight and fineness^
and in quantities sufficient to meet the needs of the whole
empire. To do this a Mint to strike these coins is of paramount
importance and indispensable. The Central Government must
establish a special Mint of its own which shall strike all the coins
needed according to fixed regulations, and no branch mints must
be permitted to be established elsewhere. As for the proposal
to start a Government Bank, while there are, of course, certain
benefits and financial advantages obtainable from such an institution,
as a matter of fact such a Bank can have little to do with the
making of a fixed ratio in the exchange of gold and silver.
3. — If it be decided to coin money to supply the currency
needed for the whole empire it would be advisable to continue to
retain the terms and weights of " tael," " mace," " candareen " and
" li " (Laing, Ch*ien, Fen, Li) as the people are accustomed to
their use. But in minting the uniform currency it will be necessary
that it should not only be accepted at a fixed value throughout
the Empire, but be also recognised and accepted at a fixed value
in exchange for gold in the other countries of the world. This must
be the main object in view and is of greater importance than
that of being the accepted currency in our own Empire. Hence
the "tael" must be made of such a weight as to correspond in
value to a certain amount of silver, which should be decided
afterwards, with the object of making it a recognised coin in other
countries. It has been recommended by certain persons that in
coining the new currency the American dollar should be made
the standard, because the American dollar has already a recognised
and fixed value in relation to gold in other countries. Others
again have also recommended that the new silver currency be
made each into a piece of coin one Kuping tael in weight, because
the present market rate of ^gold exchange is eight Kuping taels
for £1 gold. Either of the above suggestions is feasible, and in
making the new currency it should be made into four kinds, namely,
one-tael, five -mace, two-mace-and-a-half, and one-mace coins. Besides
these silver coins there should be also struck two kinds of copper
money, namely, ten-cash pieces and one-cash pieces (lo cash=one
fen; one cash=one li). After the establishment of the Mint and
the striking of coins of all kinds, it will then be time to decide
88 Chtna!s Business Methods.
when the new currency shall be launched upon the country. No
other coins should be permitted to circulate in the Empire after this.
4. — As soon as it has been decided what coins are to be struck,
proper regulations should be made with regard to the mint to be
established. If too many branch mints be allowed it is to be
apprehended that the money struck may not be of uniform weight
or fineness, and so confusion may be caused, such as is now prevalent
in this Empire, and thus infinite trouble and obstruction to the
reforms suggested may arise. The best way would be to select
some central spot for the construction of one principal Mint
which shall coin all the currency that may be needed by the
provincial governments. With the exception of this principal Mint
no other mints shall be allowed to be established. All the minting
machinery now in use in the various provinces should be without
reserve sent to the principal Mint in question so that there
may be no waste of the money expended upon it. Besides the
native workmen to be employed in this Mint there should also
be engaged certain foreign experts, namely, one superintendent,
one examiner of silver, one head machinist, and one accountant,
each having his special department of work. The one-tael and
five-mace silver coins that are to be struck should be made of
nine-tenths silver and one-tenth copper ; the two-mace -and-a- half
and one-mace coins should be made of eight-tenths silver and
two-tenths copper. The one-tenth and two-tenths silver balance
thus obtained to be utilised as running expenses of the Mint. These
coins being thus substantial no one will try to change them.
When the Mint has been established it should first begin with the
work of coining into money the silver ingots deposited in the
provincial treasuries which should be all sent to the Mint to be
turned into currency. Should silver bullion be brought to the
Mint with the request that it be coined, the foreign examiner of
silver should weigh it, and test its fineness. If these should prove
satisfactory the money already coined by the Mint shall be paid
out in exchange for the silver bullion. Furthermore, as to the
question whether the Mint shall issue silver notes or prepare silver
certificates against the amount of silver coins deposited in its
vaults, this is a matter of much importance and requires deliberation
and farther consultation.
Money. 89
5.— After the opening of the Mint, an Imperial decree should
be issued prohibiting the circulation of any silver currency within
the limits of the Empire other than that struck by the Imperial
Mint. A certain limit of time must also be given for the stoppage
•of circulation, as money of the realm, of all silver sycee and silver
ingots hitherto passing current as money, and granting permission
to the possessors of such silver to take them to the Mint to exchange
for the new currency according to weight of silver so brought. It
should also be set forth by Imperial decree fixing the exchange
value of the new currency, namely, how many taels shall be
•equivalent to £i gold, and how many copper cash to the tael.
With regard to the important question of making the new currency
accepted in other countries the authorities of the Mint shall, after
the issuance of an Imperial decree, appoint an officer to take
•charge of the duty of exchanging certificates issued by the Mint
for gold. This officer shall be given a certain number of said
certificates and shall be stationed either in China or abroad. Foreign
merchants who have firms, business, or banks in China must use
Chinese currency, and in order to obtain such currency are bound
to apply to the above named officer for these Mint certificates.
Moreover, in buying these certificates, the foreign merchants must
pay in accordance with the fixed rate of gold for silver currency
as determined by Imperial decree. After complying with these
conditions, the foreign merchants may then exchange these
-certificates at the Mint for the new currency coined by it. The
gold paid in exchange for the said Mint certificates may either be
first deposited with the officer in question, or be used to pay the
foreign gold debts due by China, or be struck into Chinese gold
coins in the future. Due note should be made of the progress of the
scheme for the guidance of all concerned in the future. By acting in
the manner indicated above the new currency will be ^fait accompli
and have free circulation, and there will be a recognised fixed
ratio in exchange between gold coins of foreign countries and
the new silver currency, to the benefit of international trade. This
is one w^ay of obtaining a fixed rate of exchange between silver
<:urrency and gold which is only explained here in a general way,
being too important a matter to be contained within the limits
of these suggestions, and it will require careful and mature
90 China's Business Methods.
consideration and consultation to avoid mistakes at the beginnings
of such a great enterprise.
6. — If it be indeed desired to obtain a fixed rate in the exchange
of silver currency for gold, there seems to be no other way of
doing so except the adoption of the foregoing suggestions. It will
also be necessary to arrive at an understanding with the banks of
other countries and work in conjunction with them ; but these
are matters requiring much deliberation and attention, and should
be taken up as the occasion offers. As to the question of whether
China should have a Government Bank, this is also a most important
matter, although it will not affect very much the question of bringing,
about a fixed rate between the price of silver currency and gold.
Therefore the starting of a Government Bank may be left to some
later period after the establishment of the present all-important matter.
It is not a question which must be started before it. However^
the various Powers all have Government Banks and have obtained
benefits from their establishment, especially Great Britain. When
China therefore has reformed her fiscal system, then it will be of
advantage to also establish a Government Bank. There are six objects
in starting a Government Bank : {a) To assist the authorities to
collect and take charge of revenue and keep account of it ; {b) To
enable the collector of revenues to keep account of monies disbursed^
etc. ; {c) To take charge of the National Debt and to pay off loans ;
(d) To take charge of monies deposited by the masses under the
same terms and conditions as ordinary mercantile banks ; (/) To-
do the same as other banks in investing government and private
funds deposited with it ; (/) To transmit for the government all
funds needed in the provinces and that should be sent abroad.
The above six clauses are the basis of a bank's existence.
There is also a further important matter to consider in such
an institution, and that is the necessity of appointing as few
officials as possible to such a Bank in order not to interfere with
the commercial nature of the place. Such a Bank having been
established, it will have to work in conjunction with the Mint.
The Mint may be even made a department of the Bank, if so it
would perhaps greatly simplify matters. With regard to the
establishment of branch offices or agencies of the Government Bank,
they should be started as the need for them arises. Indeed, the
Money. 91
present Customs Bank in the outports or any substantial financial
institution, may also be selected to take up the duties of such agencies
in the usual manner like other Bank agencies.
The first and most important idea in these suggestions is of
course the making of a fixed rate in the exchange of silver currency
and gold. The next idea refers to the extension of the first, on
the understanding that the first idea has been made a fait accompli.
Should it be determined to put into practice these suggestions,,
there are yet details connected with them which may be entered
upon as each question arises.
<)2 China's Business Methods.
BANKS.
There is much authentic evidence that the
Chinese understood and practiced a system of
banking long before the inhabitants of Western
nations had any very clear conception of the
functions and conveniences of that branch of
mercantile business. The rules regulating the
iDanking system of the ancient Chinese were
naturally primitive, but answered the ends of
T)usiness as then conducted, though, in order to
facilitate trade, the scope of the system has
been enlarged, and, as at present known, has
received the favorable comment of the banking
experts of the West.
There is no law in China providing how
banks shall be organized and incorporated, and
there is a similar defect in the law as to
associated companies. When those having
capital desire to engage in banking they simply
select the place, unite their capital in such
sums as may be agreed, and they are then
ready for business.
But there is the peculiarity in Eastern life
that the^jK Lcupation of the^ ,.,pafent-^irlnvariablv
followed by the son, and so on from
Banks. 95
generation to generation, and, in accordance
with this peculiar custom, the banks in the
large commercial circles are generally owned
and managed by the inhabitants of the province
of Shs^n-si. calle d Shan-si men, who have received
the ir training from ancestral experience and
teaching, and, like the great banking houses of
America and Europe, they have the strength
that comes from experience and prestige, and
the confidence which is the attendant of success.
A general understanding of some of the
leading rules which have been adopted by the
Shan-si bankers, as the guide for transacting
business, will not be without interest in giving
an inner sight into the banking system of
China.
The bankers, themselves, being Shan-si
men, always aim to employ o nly^ n?^ tiv^<^ f^f th^
si, and, when possible, sp1e €t
own villagfi. When a man is.
appointed to a post at one of the branch \
offices, his family is taken in charge by .the
bank and held as security for his fidelity \na
good behaviour. But it is understood that the
family is not actually held ^^^in prison, though
kept under the strictest sunr?mance. While
at his post the employee is not permitted ta
write to any member of his family under seal,
but all such letters must be open and sent
94 China's Business Methods.
through his employer. No salary is paid, but
all necessary expenses incurred on his behalf
are actually kept and discharged by the bank.
The term of the appointment is for three years,
and after the expiration of that time the
employee goes to his employer's house, taking
with him an account of the money expended
during the term, when he is closely searched,
€ven to his clothing. After a full examination
has been made, and the accounts found
satisfactory, and the aflfairs of the bank have
been prosperous during the three years, the
reward is made remunerative, and the employee
joins his family, who th ejL-jno . longer remain
under snrvftjllam!^. But in the event that the
investigation, both of the accounts and the
condition of the bank, prove unsatisfactory, the
effects of the employee are seized and his
family continue, as it were, in bondage, until
a suitable fine is paid, or the employee may
be imprisoned.
It is the means thus employed by the
Shan-si bankq|S^-to^ secure their banks against
losses by ySeMcatrins or otherwise that have
entrenched them in public confidence, and they
are often used by the Central Government as
the medium for the transmission of revenue
from the provinces; and their customers may
be found among oflBcials of the highest rank.
Banks.
As an additional protection, the head
managers of the banks associate together in a
Guild, and, when the occasion demands, they
formulate a line of policy to meet the
particular emergency. The rules to govern in
the general banking business relate to the
subjects which enter into the daily operations,
such as the rate of exchange, as regulated by
the tables posted on the boards of the bank
guilds, and the bank violating any of the rules
is fined a certain sum. There is also a rule,
that the books of a bank shall be carefully
examined, and that the discovery of any
underhand dealing, or any attempt to conceal
a transaction, is punished with suspension.
Each bank issues its own bills, which are
made payable to bearer, and customarily on
demand, but sometimes are payable so many
days after being issued. When a bill is
presented, the holder has not the option to say
what shall be given him as the equivalent,
though his preference is generally respected ;
the bank can pay the bill in either cash, the
current bills of another bank, or in silver or
gold according to the current of exchange.
If the bill is not paid when presented the
custom, in some places, permits the holder to
seize anything in the bank about equal in
value to the amount of the bill, and take it
x)6 China's Business Methods.
away with him, without incurring the liability of
being prosecuted for theft or misdemeanor.
There have been instances, when there was
suspicion that a bank might not be prepared
to promptly pay its bills on presentation, of
conspiracies on the part of certain holders of
bills to present them at the same time, and
regarding any hesitation to pay as a pretext
for rifling the bank. There is an instance
where the very timber of the building in which
the bank conducted its business having been
torn down and carried off because of a failure
or hesitation to promptly honor its bills on
presentation.
But such spoliation of a bank is seldom
the act of the real holders of its bills ; it is
generally the act of the rabble and unemployed
who are ever on the watch to make a living by
violence rather than by industry, and to check
the violation of law and order a certain Viceroy^
when there was an unusual panic among bill
holders, arranged to have the payment of bills
refused by a bank, named for the purpose, and
no sooner was payment refused than an attempt
was made to rifle it. Those engaged in the
attempt were arrested, and upon examination a
large majority were found to be of the vagrant
class; they were immediately decapitated in
front of the bank building, and the example
Banks. 97
was remembered and proved a wholesome
preventive.
A precaution taken by a bank, when a run
upon it is anticipated, is to post in a conspicuous
place the words **will hereafter pay," which
mean that all holding the bills of the bank are
requested to present them for payment, and it
also implies that the bank is desirous of closing
its business and will not issue any more bills.
When this precaution is not taken the influence
of a high oflScial intervenes, at the request of
the bank, and closes its doors and gives the
manager time to put the aflFairs of the bank in
a better condition. But the large banks have
their connections throughout the Empire, and
there is generally an understanding to mutually
assist each other in case of emergency, and
the connection not only guards against sudden
emergencies and money panics, but proves a
great convenience in the transmission of money
throughout the Empire, and to those who travel.
There is no difficulty in getting letters of credit,
and the system of remittance by draft is quite
perfect.
As a preventive against the over-issue of
bills by a bank, the clearance houses, which
are in nearly every city, exercise a safe restraint
in the knowledge they have of the business of
the bank, and can quickly detect any evidence
98 China's Business Methods.
of carelessness or of a disposition to venture
beyond prudent limits.
The bills of the Chinese banks present a
neat appearance and have various devices to
prevent successful counterfeiting. The wealthy
banks use solid blocks of brass for engraving
purposes, while the poorer banks use blocks
of wood, the value of a bill and date of
issue are filled in with a pen, and one or
more words to facilitate the detection of a
counterfeit. Various stamps, large or small,
round or square, or oblong, some of which are
very curiously and elaborately engraved, are
impressed on diflferent parts of the bill, using
red or black ink. The right hand margin is
made an inch or more wider than the left
hand margin, and the use made of the wider
margin is the greatest security against counter-
feiting, for on this wide margin are written
various words, phrases, or sentences before
the bill is cut out or trimmed and put into
circulation, and these stamped or written
sentences or phrases are cut through by a sharp
knife, leaving the right hand margin about the
same width as the left, though presenting a
very diflferent appearance. The slips of paper
thus cut oflF from the right hand margin are
kept by the bank for ready reference, and as
the sentences have been cut into two parts,
Banks. 99
part of the words and stamps will be on the
bill and part on the slip of paper cut oflF, and
these, by comparison, will prove the genuineness
of the bill.
The bills of the banks, well known to trade
for promptness and capability, have a wide
circulation, but, as a general rule, the bills of
a bank circulate in the city where the bank
is located, and sometimes the circulation is
limited to the street on which the bank is
situated.
But if a native merchant in the interior
wishes to buy a draft on a native bank at the
open port of Shanghai, he would not employ
a broker, but would inquire the price of such
a draft of the diflFerent banks with which he
had business relations. If the draft he wanted
be for I GO taels, and at thirty days, he would
have to pay, as an approximation, about 107-108,
or no according to the state of the market.
If the merchant should want an extension of
credit at Shanghai, he would have to pay about
II per cent, interest per annum, if money matters
were easy, otherwise as much as 29 per cent.
If the merchant has money on deposit at
Shanghai, he would receive, when rates are
low, interest at the rate of about 9 per cent.,
but if the rates were high, he would be paid
as much as 27 per cent, per annum. The
lOO China's Business Methods.
term of payment and interest, however, are
governed by the state of the money market
and the financial standing of the merchant.
Although the Chinese may engage in
banking business without obtaining the consent
of the Central Government, it does not follow
that the government remains indiflferent to the
conduct of those engaged in the business.
There are, comparatively, few bank failures in
China, and when a bank is compelled to close
its doors the government institutes the most
searching inquiry, and the most severe punish-
ments are meted out to the managers. If the
inquiry should disclose that the failure of the
bank was caused by negligence, the immediately
responsible parties are summarily decapitated,
and their families are seized and imprisoned
until all losses are paid; all their property
being confiscated, and all relations of the family
are forbidden ever to live again in the native
town or village of the family.
It may be safely written, that the Chinese
have a characteristic regard for promptness
in business, and that they have the other
characteristic of civilized men, the capacity
for combining ; they have great respect for
authority, are law abiding, and have the habit
of self control, all of which cause them to
appreciate the advantages of business organiza-
Banks. 10 r
tion. The Chinese are business men, and know
that no business of a civic nature can be
successfully conducted, or lead to satisfactory
results, without order and respect for established
customs. Merchants by nature, they are
consequently lovers of peace, and rightly
believe that the surest foundation of successful
business is an orderly state of society.
There are foreign banks at nearly every
open port of China, and the facility and
convenience given trade of every description
by the native and foreign banks leave but little
to be desired in the department of banking.
Both the foreign and native merchants have
only to exhibit the credentials which entitle
them to confidence and the favor of the banks
will generally be extended. But the inner
Chinese system of banking must still remain in
some parts a mystery, until foreign intercourse
brings about a greater intimacy and opens the
forbidden door. From what is known of this
system it is accurately based and meets the
necessities of native business. When funds are
placed in a bank the depositor is furnished
with a pass book, and whenever he draws for
money he sends his book to the bank where
the sum drawn is entered. If the book is lost
there might be difficulty in recovering the
money which had not been drawn for. None of
102 China's Business Methods.
the persons employed in the banking business are
responsible to or connected with the government.
Bills of exchange and promissory notes
circulate; these are either payable at sight, or
within a given period after sight, in which latter
case they are regularly accepted; and, lastly,
they are sometimes made payable at a fixed
period. A certain sort of promissory note is
used, which does not pass through the hands
of more than three or four persons, all of
whom are well acquainted with each other. In
lieu of endorsing the original note, in the
manner customary in Western nations, they
attach a piece of paper to it, in which they
assign the reason why it has been handed over
to another person instead of the money ; at
maturity the holder does not apply for payment
to the drawer, but to him from whom he
received the note, and thus each endorser
proceeds, until at last it reaches the drawer, or
the three or four persons whose names are
on the endorsement, including the actual holder
of the bill, call together on the drawer for
payment. This latter mode is considered the
most simple and eflfectual.
Note. — ^The number of banks of deposit and emission is large
in proportion to the business of a town, but their capital averages
only two or three thousand taels. • . . The check on over-issue
Banks. 103
of notes lies in the control exercised by the clearing-house of
every city, where the standing of each bank is known by its
operations. . . . Proportionately few counterfeit notes are met
with^ owing more to the limited range of the bills, making it
easy to ask the bank, which recognises its own paper by check tallies,
of which the register contains two or three halves printed across
the check book. When silver is presented for exchange, the bills
are usually filled up and dated as the customer wishes while he
waits for them, their worth depends on the exchange value between
silver and cash, and as this fluctuates daily, the bills soon find
their way home. (Williams.)
I04 Chinas Business Methods.
GUILDS.
History records that the Greek had neither
the Roman's conception for political unity nor
the talent of the Carthaginian for commercial
pursuits, and was as incapable of sinking his
personality in the ranks of an organization as
he was of devoting his energies to money-
making. It may be written, that of the
characteristics of the Chinese, there is not one
which indicates an appreciation of the strength
there is in political unity, although the
Government of China is absolute in theory,
but, in recognition of the advantages of
commercial organization, no people have
surpassed them. There is not a branch of
mercantile business conducted by Chinese that
is not organized in all the essentials of success,
and there is no mercantile organization which
exerts as much influence in the commercial
aflfairs of the Empire as the guild. The
influence of this organization is an evidence of
the practical weakness of the Central Government
of China, for history teaches, that when an
organization of the industrial classes has such
great scope for activity, in an empire or
Guilds. 105
monarchy, the central power is proportionately
weakened; such was the case on the continent
of Europe, for, when ci vil life was th e
strongest, the cf^x\\r^\ gnvprrm ^ent was the
weakest, and in England, when, after tne
Norman Conquest, there had been a compara-
tively strong central government, the guilds
found less scope in that way.
The di'd^SLJ ^ the origin of mercantil o guildc
in China_i& nnf arcumlcl)' kiiuwn, but it counts
back into the centuries. They were first ^^\^Z
organized at the metropolis by the mandarin^ \^ -
and their compatriots or fellow provincials for
mutual aid and protection, and, subsequently,
guilds were organized in nearly all the
provinces. As the principle of mutua l aid and
protection is the foundation, the guild s^^ha ye been
secured in the exercise of that function by the
permission and approval of the local officials,
which imparts to the organization a somewhat
semi-official character. This official character is
clearly seen in the custom that permits a
guild to prosecute, in behalf of a member,
any claim when there is satisfactory evidence
of its equity, and when a member resorts to
law for redress of a real grievance, and has
not the means to vindicate his rights, the guild
will address a joint petition to the court,
and undertake to defray half the expenses from
io6 China's Business Methods.
its funds. But should it be afterwards discovered
that the case has no merit, or that the trouble
originated from gambling, or the leading of a
dissolute life, the guild will not aflford any
assistance. If there should be a claim between
members, which cannot be amicably adjusted,
and litigation ensues, three-tenths of the cost
will be borne by the guild and the balance ,
by the litigants ; but before legal proceedings
are commenced there shall be a meeting of
the members and unanimous approval obtained.
The three-tenths, however, contributed from
the general fund, shall be inclusive of the
sum in litigation, and will only be given when
the claim is insufficient to cover the cost of
the proceedings ; and when the amount of the
claim is sufficient to liquidate the cost no
grant from the general fund will be jnade, but
this refusal is not with the view of saving
expenditure, but with the object of preventing
advantage being taken of the rule for gain and
to repress the spirit of persistency in litigation
between members.
But the local officials and the guilds da
not always act in concert. There are instances
when there has been a conffict, and the guilds
oftener than otherwise have, in their appeals
to the Central Government, succeeded in having ^
the action of their opponents disapproved. The
Guilds. 10 J
prompt consideration given by the Central
Government to petitions from the guilds
encourages the local officials to cultivate an
understanding that will promote harmony and
concert of action.
The guild has its place for regular meetings^
and the building is usually the most imposing
and palatial of Chinese architecture. Not only
is the building the head-quarters of the guild^
but there are halls for theatrical performances,
rooms provided for high officials when travelling,
and also, for scholars, and especially for the
last, whose influence is ever great in whatever
direction they may exercise it.
The officers of the guild consist of a
general manager, a committee, and a secretary.
The committee is elected annually, and is eligible
for re-election. The secretary is invariably
elected from the literary class, is a permanent
salaried official, and the most important officer of
the guild. The secretary has a quasi-official
rank, by virtue of belonging to the literary class^
and, therefore, the right to personally interview
the local officials, and is the medium of
intercourse for^the guild in matters relating ta
its interest.^ -^The membership is limited to
about thirty, a number which is considered
not too large to insure an intelligent discussion
of the subjejcts before it, and at the same time
io8 China's Business Methods.
a guarantee against long debates; and, to secure
decorum and decision it is provided, that
should there be anyone of higher ability than
the rest, and with a plan of his own to propose,
whatever his station may be, he must argue
and explain it before all the members, but
after a decision has been rendered there shall
be no further discussion. There does not
appear to be any written rules in the sense
of parliamentary rules, but there are regulations
tending to prevent useless and prolonged
discussions, for such would impair the influence
of the guild, which is sustained and strengthened
by prompt decisions and prompt enforcements
of the same.
Some of the guilds have a department
and a special committee for each staple
commodity, as well as sub-guilds in the several
prefectures, while at the small ports the
management is entrusted to the members in
turn.
The source from which a guild derives
the revenue that supports it is the self-imposed
tax of its members. This tax is in the nature
of an assessment on the commodities sold by
the members, and which varies according to the
exigencies of the situation. To make the
assessment equitable there is a monthly
examination of the books of the establishments
Guilds. 109
of the members made by the clerks of the
various firms in rotation, and two are detailed
every month for that purpose where the firms
are numerous. There are guilds, however,
which derive sufficient income from their own
property, but the inquisitorial proceedings of
examining the books of the merchant members
is a part of the policy of the guilds, and the
merchants voluntarily assent to it when they
become members. In order to prevent
undervaluation, it is the rule of some guilds
that members, at the annual meetings, shall
hand in duly sealed statements of their
contributions for the year, and in proof of
good faith, shall bow before the god of the
guild temple. But if the statement should be
confused, or called into question, there is a
ballot taken to decide whether the member
shall produce his books for examination by his
co-members, and, if the statement is false, he
is fined five times the sum due. When a
member fails to produce his books or to pay
the fine he is then expelled from the guild.
As the guilds have laws and regulations
of their own, and are held together by the
strong bond of mercantile interest, what is
known of these laws and regulations warrants
the inference that there is behind them some
code of Chinese mercantile law that would be
no China's Business Methods.
interesting in comparison with the mercantile
codes of other nations. Even the courts of
China accept the rules of a guild as authoritative,
and such rules are quoted and referred to in
the courts as if statutory enactments, which
proves again the potent influence of the
custom of the business men of the Empire.
And when a member appeals directly to the
courts for redress, the guild will not use its
influence in the adjustment of his complaint,
nor will it, at any future time, entertain any
petition from such member, but will dismiss it
without a hearing and reprimand the offender.
In disputes in regard to money matters between
members, the disputes shall be submitted to
arbitration at a meeting of the guild, where an
effort will be made to settle it, but if
unsuccessful, and only when unsuccessful, can
an appeal be made to the authorities.
The jurisdiction of the guild is comprehensive,
and extends to money matters and all other
disputes between members. It also acts as an
agent in the settlement of controversies between
members and those who are not members; and
should a member set at defiance any function
claimed by the guild he is expelled, and all
intercourse between an expelled member and
another is interdicted under the penalty of a
fine of one hundred dollars against the latter.
Guilds. 1 1 1
No metnber shall have any relation whatever,
and on no consideration confer, with an expelled
member, either from sympathy or friendship,
and there is no ** boycotting" as exclusive and
sweeping as the Chinese enforce.
The regulations referred to are of a general
character, and indicate more the judicial
functions which custom and oflScial sanction
have justified the guilds in assuming and
exercising, but the rules on credit, storage,
commission, weights and measures, tax, fire,
loss, and fictitious selling and buying are
carefully prepared as well in scope as in detail.
Every probable contingency appears to have
been considered and provided against, and
mercantile acuteness is evinced in both the
breadth and minuteness of the rules.
It may be observed, that the disposition
to anticipate the scarcity of a commodity, or
a rise or fall in prices, and, in consequence, to
take advantage thereof, is as natural to the
merchants of China as to the merchants of any
other country, and the bujdng and selling on
future delivery, when there is nothing substantial
in possession or in sight, was practiced in
China long before it was in the commercial
exchanges of Western nations. The complaints
against the practice were of the same nature
and with the . same reasons which are now
112 China's Business Methods.
being urged by the advocates of keeping
business separate from speculative influences and
holding mercantile transactions to legitimate
lines.
As the trade relations between China and
Western nations are annually increasing in
importance and value, the inner constitution of
the guild ought to be the subject of diligent
inquiry, for a full knowledge of organizations
that have such influence on the internal trade
of the Empire must be essentially requisite to
success, as the power of the guilds to favorably
or unfavorably develop the trade* of China is
undeniable ; and an example of that power was
given in the case of the riot at Shanghai in
1898, which was caused in the following way:
It is the custom that when a Chinese, who
hails from Ningpo, dies at Shanghai, his body
is placed in a coffin and stored away until the
opportunity oflfers to send it to Ningpo, and
the subject is one that comes within the
function of the Ningpo guild. There were a
great many coffins containing dead bodies so
stored in the French Concession at Shanghai,
and the French Municipal Council had
ordered the removal of the dead bodies, in the
interest of health and the convenience of the
public, but the Ningpo guild signified its purpose
to resist the removal. The French Municipal
Guilds. 113
authority persisted, and a riot occurred in which
several Chinese were shot by the French
police and volunteer force. It was then that
the Ningpo guild issued a secret order for the
suspension of all business, which resulted in
several large steamships remaining at their
wharves and the loss of much money. And so
long as the guild remained firm, every branch
of business which drew its vitality from that
source was paralyzed. There was finally some
kind of a compromise by which business resumed
its usual channel, but the instance illustrates
the rule.
It is not too positive to write, that it is
within the power of the guilds to interfere
with commercial intercourse in China, to
seriously impair the commercial relations of
Western nations with China, and to compara-
tively drive from the trade marts of the Empire
the foreign products now sold in those marts, or
to make the demand for them so unremunerative
as to partially destroy importation, while the
Central Government, if it had the inclination or
the means, would scarcely have the courage to
remove the organized obstruction or to punish
the obstructors.
The trade union is of more recent origin
than the guild. It is modelled after the
guild, but is mostly composed of retail dealers.
ii4 China! s Business Methods.
The regulations are usually printed on red
paper and posted in the stores or workshops,
and these regulations have reference to and
regulate all the different trades that may be
followed. There is a regulation about weights,
the manifest of a cargo, the tariff of charges,
and the jwohibition against purchasing a cargo
which had not been passed by the trade union.
There are separate trade unions for blacksmiths,
carpenters, wire-drawers, silk-weavers, millers,
postal companies, and barbers, and each vocation
has rules suitable and peculiar to it.
The members of the trade unions also
have their places for meeting to consider the
condition of their respective trades, and to
discuss the ways and means to protect and
promote them. The number of hours for work
is not modern, but old in China, and a subject
which receives the careful attention of the
union. Whatever subjects come within the
scope of the union are quietly considered and
the decision is as quietly adhered to, and
society is seldom threatened with violence or
disturbance, but the members accomplish their
object by the closeness of organization and
through peaceful agencies.
In this connection it will be relevant briefly
to refer to another Chinese institution, which
has been fostered into existence by the wants
Guilds.
and necessities of the poor classes who are
unable to avail themselves of the conveniences
aflForded by the banks and money-lenders, and
this is the pawn-shop. It would be almost
impossible for many worthy Chinese to support
their families and cultivate their little farms
without the assistance of the pawn-shops. In
nearly every village and town there are
jiawn-shops, and during the spring and summer
months the Chinese pawn their winter clothing
for the ready money needed in their homes
and fields. When the crops are harvested, the
part not necessary for family consumption is
sold, and the proceeds applied to redeem the
winter clothing, or if there has not been a
good crop made, the spring and summer
clothing, and other articles not specially needed,
are pawned, and thus it goes on from season
to season.
So important a place has the pawn-shop,
in the economy of the life of a Chinese
laborer, that the Central Government takes
cognizance by granting it a license, and holds
those that are private and unlicensed to be
illegal.
To successfully fulfil its functions, a
pawn-shop should have a large capital, as the
usual time for keeping the article pawned before
selling it is three years. If the^ article is of
Ii6 China's Business Methods.
a perishable nature there is generally a special
agreement, but special agreements are not
favorably viewed, because the three years' rule
is not to be violated without the best reason.
The buildings are necessarily large, and the
interest charged of necessity varies according to
the nature of the article pawned. But the
rate is not optional with the parties : it is
regulated by law, and no claim for interest in
excess of the principal will be enforced.
A character peculiar to mercantile life
among the Chinese, and who, in many respects
is an advertising medium, is the character known
as the middleman or the go-between. He is
mostly connected with importers, wholesale
■dealers, and owners of houses and land, and
should be familiar with the markets of such, and
competent and prepared to give accurate
accounts of what is going on therein. The
compensation of the middleman is a certain
per cent, fixed by custom, on sales or rentals
made through his agency or medium. His
place in Chinese business has been indispensable
and will probably so remain until shaken by
newspapers and prices current, though it will
be a long time before the merchants of China
adopt such mediums for advertising.
Another character unknown to Western
mercantile life \s the compradore. He is
Guilds. 117
supposed to be the servant of the business
house employing him, and his primary duty is
to learn and report to his employer the
commercial rating of all Chinese who would
establish business relations with the house
represented by him. When business relations
are established the compradore is the guarantor
for the accounts of all Chinese whom he
recommends to his employer as reliable in
business. It is the custom to require the
compradore to execute a bond conditioned for
loyalty and faithful performance of his duties
as compradore, and if he proves loyal and
faithful he then fills a very important office in
the mercantile life of China, but, when a rascal^
his office can be perverted to entail losses
which cannot be seen in time to be averted.
And the opportunities of a compradore are
such as to show how important it is for foreign
merchants to understand the language of China^
a neglect the merchants of the United States
have taken special care it seems to cultivate, for
there are but very few young Americans in China
preparing themselves to undertake the business
which must, ere long, be left to some one by
the present heads of the established houses now
under the superintendency of Americans.
The outline herein given of commercially
organized China must convince, that to deal
Ji8 China's Business Methods.
successfully with the Chinese one should
understand their inner mercantile life and
have some knowledge of the influences that
move and regulate it.
Note. — In one of the Swatow Imperial Maritime Customs
Commissioner's Decennial Reports the following appears with
reference to Trades Guilds. The Commissioner reports : —
"These institutions seem to be a material manifestation of
a local characteristic of the people, for not only do merchants
combine for trade purposes, but the labouring classes, whatever
their employment, all band together on the slightest pretext,
whether their object is to obtain wages, or to secure the
dismissal of an outsider. It is recognised throughout the
Empire that in their remarkable faculty for combination, and the
rigid obstinacy with which they maintain a position once taken
up, the people of Swatow are equalled by none of their fellow-
countrymen. In addition to the ordinary expenses, the guild has
to spend a good deal in making presents to officials, giving
theatrical performances in their honour, and showing them respect
in various other ways. The income out of which all these
payments are made, amounting to several thousand dollars in a
year, is derived from a tax on merchandise, entrance and clearance
fees from merchant vessels, and the rents of property owned by
the guild. So far as I can gather, the guild's methods of working
seem to be as follows : — Whenever a question crops up affecting
any particular trade, the heads of the principal firms engaged in
it first come to some agreement amongst themselves, then talk
over the lesser firms, until they have gained a sufficient following;
and only call a meeting of members to adopt what they have
agreed upon as a rule of the guild. Nothing seems to be left to
a vote in open meeting ; if the dissentients are strong, the matter
never comes before a meeting at all. Frequently the guild does
not wish its action to be visible and then no laws are committed
I UNiV
Guilds. \c^^ 119
to writing, but a general understanding is arrived at, which seems
to be just as binding as a formal utterance. In this way, most
likely, they masked their resistance to the imposition of extra
provincial likin — the Battery Tax — in 1890, when no dealer [in the
taxed articles dared to come to any arrangement with the collectors
sent up from Canton, who were unable even to rent a place in
which to establish themselves, so that eventually all attempts to
force payment had to be given up. By the guild's decrees
steamer companies are forced to pay claims for damaged uninsured
cargo, which they feel to be unjust. If they demur, no case comes
up for trial : the loss of their carrying trade is the penalty that
quickly makes the objectionable demands seem reasonable. In
1 88 1, some Swatow merchants were heavily fined for disregarding
a Customs rule affecting the examination of cargo. The guild
took the matter up with spirit, and an anonymous note called
upon merchants to cease all import and export trade unless their
demands were complied with. In that particular instance the
guild was unable to gain the point for which it was fighting,
but the trade was kept completely at a standstill for fifteen days,
pending its decision to submit. The guild concerns itself with
the commercial interests, individual and collective, of its members;
settles trade disputes; enacts trade regulations; and performs, with
equal readiness, the functions of a Chamber of Commerce, a Board
of Trade, and a Municipal Council. It supports a fire brigade,
levies its own taxes, provides standards of weights and measures,
fixes rates of commission, determines settling days, provides
penalties against the tricks of trade, and acts generally as the
guardian of its adherents, and the terror of all with whom they
do business. It possesses a power to enforce its views which might
be envied by many a government, for in it is vested the sole
right to the exercise of that mighty engine, 'that stalwart crusher
of arguments, to which an episode of modern Irish history has
given the name of boycotting."
I20 China's Business Methods,
IMPERIAL HOUSEHOLD.
As the family unit is the central idea of
the Chinese administrative system, the family
life is the key to the moral character of the
people; and, as in a despotic government, the
will of the Emperor is law, his acts are also
the examples which influence his subjects.
Public opinion in China is influential, but it
is by permission and not by right.
In a republican form of government the
people make the laws and influence the course
of events, but in a despotic form like China,
the people, in theory, have no authority, and the
toleration of customs and laws which do not
refine their character rest with the Emperor,
who has the absolute authority. *^The people
exhibit rather the fault of those who reign
than those who suffer."
The influence which inculcates morality and
refines character is strongest in the domestic
circle, and to learn how morality in appreciated
by any people one must study the customs
and laws which regulate their marriages and
govern their family life.
The wife of the Emperor is selected from
Imperial Household. 121
certain families of the Imperial clan, but in
making the selection the parties that should be
primarily interested are not the principal ones.
The choice and all the details are made and
arranged by special friends, and neither the
heart of the bride nor of the bridegroom is
consulted; if the marriage is afterwards
sanctioned and brightened by mutual love it is
the happy result of the unfeeling act that
brought it about.
The Emperor has but one Empress, she is
the only wife, but he has seven legalized
concubines, and the child of either may dispute
the succession to the throne. Should the
Empress fail of oflFsprihg, or should she not,
the right of the Emperor to select his successor
encourages intrigue and the use of influences
destructive of happiness and confidence. True,
all females in the palace are under the direction
of the Empress, but nominally only, and the
law that fills a palace or a home with
concubines hardly favors morality or happiness.
And when every three years the daughters
of a certain class of high officials are passed
in review before the Emperor, that he may
choose those that please him to replenish his
harem, and when a father considers it an
advantage to the family to have a daughter in
the harem, as a back-stair means of rising to
122 China^s Business Methods.
influence, there need not be any difiiculty in
finding the key to the cause which assigns to
woman the unmerited position she occupies in
Chinese society.
Custom precedes law, and beyond the
memory of man, concubinage in China has had
the approval of custom; there has been no
law against it, but on the contrary the immorality
is perpetuated under the sanction of law; what
custom has failed to do to demoralize family
life the law has supplied.
But it should be noted, in favor of the
later Emperors of China, that an Emperor is
allowed but one wife, one Empress, while in
earlier times the Emperor was allowed four
Empresses.
In the description given of Kublai Khan,
Marco Polo states the number of his legal
wives as four, bearing equally the title of
Empress, with separate palaces, and each no
fewer than three hundred young female
attendants of great beauty, together with a
multitude of youths as pages; and that, besides
the four Empresses, there were selected for
him any number of concubines desired from
the handsomest women of his dominion, and
that the fathers regarded it as a favor and
honor done them.
In addition to filling his palace with as
Imperial Household. 123
many concubines as he wants, the Emperor is
allowed three thousand eunuchs, supposed to
perform the work of the household, and his
sons, grandsons, and Imperial sons-in-law are
each also allowed a certain number according
to their respective ranks, and custom requires
that such appurtenances of rank shall be
maintained.
There can be no enlightened progress
in any country where fathers sacrifice their
daughters to gain official preferment, or where
custom honors the family whose daughter is
selected for a harem. There may be intellectual
progress, but when the mind is not lighted by
the appreciation of female character it fails in
the work of civilization.
Some of the Emperors of China, despite
their surroundings, have given proofs of greatness,
but to live surrounded by harems of beautiful
women, and guards of sexless men, encourages
the intrigues which demoralize social and
official life, and which have given China a long
list of Emperors too feeble to grasp the true
destiny of an Empire possessing the reserve
forces that only need proper direction to bring
wealth and renown in return.
It then appears, that the family life of the
Emperor could not well encourage the virtues
and affections which alone can make that life
124 China's Business Methods.
happy and a worthy example for his subjects.
Although removed and exclusive, the life iii
the palace is known to the Chinese, who model
their family life after it, and plead it as a
defense against criticism.
The internal arrangements of the Emperor's
court are modelled after a miniature state, there
being seven departments, each department having
certain functions of duty and jurisdiction over
those connected with the palace.
From the Emperor it is but a step to the
Imperial clansmen and nobility, and these are
influential in the government and the support
of the throne.
The reigning dynasty is not native to China.
It was founded in A.D. 1583-16 15 by Hien Tsu,
a Manchu, and all included in the Imperial clan
are his descendants or connections. There is a
clansmen's court which controls the Imperial
clan and regulates whatever belongs to the
government of the Emperor's kingdom.
The kindred of the Emperor are divided
into two branches ; the direct, comprising the
lineal descendants ; and the collateral, including
children of uncles and brothers, the distinguishing
mark being a yellow girdle for the Imperial
house, and a red girdle for the collateral. The
collateral branch is called the Gioro line^
represented by the chiefs of the eight Manchu
Imperial Household. 125
families who aided in settling the crown in that
line, and are hereditary princes, collectively
called Princes of the Iron Crown.
The titular nobility is not founded upon
landed estate, or the ownership of land, and the
title does not confer any power, but it is more
an ornament to please and gratify vanity.
There are twelve orders of nobility which
are conferred solely on members of the Imperial
house and clan. It was the custom at one time
for the nobility to reside away from the capital,
and, to curtail their influence, they were paid
certain salaries at certain periods, and were
restricted from engaging in any business, but the
custom is no longer enforced. The government
of the province of Manchuria is chiefly confided
to the nobility.
But there are some ancient orders of nobility
which are highly prized as the marks of honor,
because conferred without distinction on Manchu,
Mongol, and Chinese, civil and military, and as
a recognition of merit.
There are only two perpetual titles of
nobility, and these belong to the direct
descendants of Confucius, and of Koreinga ;
that of Confucius is called the ** Ever Sacred
Duke," and that of Koreinga, the **Sea Quelling
Duke."
Confucius owes his title to his writings.
126 Chinas Business Methods.
which have instructed and influenced a greater
number of minds than the writings of any other
man. They have stood the test of centuries
and are to-day the basis of Chinese law and
the classic of Chinese scholars.
The effort of Koreinga to save China from
wearing the yoke of a conqueror won for his
descendants the honor they enjoy. When the
native dynasty was overthrown in 1643, by the
Manchu invaders, Koreinga refused to acknow-
ledge the conqueror, sailed away to Formosa,
drove the Dutch from the island, and made
himself master of it.
The recognition of the learning of the
scholar, and the loyal valor of the warrior, by
perpetuating both alike on the roll of honor, is
a bright page in China's history ; and when it is
remembered that a Manchu has occupied the
throne of China for centuries, and that it was
against the Manchu that Koreinga opposed all
that loyalty and valor could do, the impartiality
is manifest, an impartiality which has been
often practised, and which has ingratiated
and strengthened the rule of the Manchu in
China.
If one could turn from such justice to
learning and valor to equal justice to woman
and virtue, there would be other bright pages,
but a closer examination of the family law of
Imperial Household. 127
the Chinese will show the defect in the social
structure and, consequently, the weakness of
the national fabric.
Note. — The constitution of the household of the Emperor
Kublai Khan is thus described by Marco Polo : — " He has four
wives, whom he retains permanently as his legitimate consorts;
and the eldest of his sons by those four wives ought by rights ta
be emperor; I mean, when his father dies. Those four ladies are
called empresses, but each is distinguished also by her proper
name, and each of them has a special court of her own, very
grand and ample; no one of them having fewer than 300 fair
and charming damsels. They have also many pages and eunuchs,
and a number of other attendants of both sexes; so that each
of these ladies has not less than 10,000 persons attached to her
court. When the emperor desires the society of one of these
four consorts, he will sometimes send for the lady to his
apartment and sometimes visit her at her own. He has also a
great number of concubines, and I will tell you how he obtains
them. You must know that there is a tribe of Tartars called
Ungrat, who are noted for their beauty. Now every year an
hundred of the most beautiful maidens of this tribe are sent ta
the Great Khan, who commits them to the charge of certain
elderly ladies dwelling in his palace. And these old ladies make
the girls sleep with them, in order to ascertain if they have
sweet breath (and do not snore), and are sound in all their
limbs. Then such of them as are of approved beauty, and
are good and sound in all respects, are appointed to attend on
the emperor by turns. Thus six of these damsels take their
turn for three days and nights, and wait on him when he is in
his chamber and when he is in his bed, to serve him in any
way, and to be entirely at his orders. At the end of the three
days and nights they are relieved by other six. And so throughout
the year there are reliefs of maidens by six and six, changing
every three days and nights."
128 China's Business Methods.
Ungrat, I doubt not, represents the great Mogul tribe of
Kungurat, which gave more wives than any other to the house
of Chinghiz; a conclusion in which I find I have been anticipated
by De Mailla. The seat of the Kungurats was near the Great
Wall. Their name is still applied to one of the tribes of the
Uzbeks of Western Turkestan, whose body appears to have been
made up of many of the Turks and Mongol tribes. (Yule.)
The Ramusian version adds here these curious and apparently
genuine particulars: — "The Great Khan sends his commissioners
to the Province to select four or five hundred, or whatever
number may be ordered, of the most beautiful young women,
according to the scale of beauty enjoined upon them. And they
set a value upon the comparative beauty in this way. The
commissioners on arriving assemble all the girls of the province
in the presence of appraisers appointed for the purpose, these
carefully survey the points of each girl in succession, as, for
example, her hair, her complexion, eyebrows, mouth, lips, and
the proportion of her limbs, they will then set down some as
estimated at i6 carats, some at 17, 18, 20, or more or less
according to the sum of the beauties or defects of each. And
whatever standard the Great Khan may have fixed for those
that are to be brought to him, whether it be 20 or 21 carats,
the commissioners select the required number from those who
have attained that standard, and bring them to him. And when
they reach his presence he has them appraised ' anew by other
parties, and has a selection made of thirty or forty of those
who then get the highest valuation."
It appears that a like system of selection was continued by
the Ming, and that some such selection from the daughters of
Manchu nobles has been continued till recent times. (Yule.)
Family Law. 1 29
FAMILY LAW.
The practice among savages of marrying
out of the tribe is a reason for the opinion
that communion with woman in prehistoric
times had to be conquered, and the later
custom, that marriage should be in the tribe,
was a transition towards marriage by contract.
Some writers maintain that previous to
1 122 B.C. a general laxity of morals prevailed
among the Chinese, but there are others as
earnest in maintaining that their ancient home
life was moral and happy. However this may
have been, there is not in the present family
law of the Chinese the satisfactory proofs that
it was founded upon customs inculcating the
higher precepts of morality.
The law that denies to the parties most
interested the right to negotiate and conclude
the most important contract of life is, in itself,
destructive to happiness and morality ; and when
the same law that does not allow a man to
select his own wife, allows him to choose his
concubines, and choose them from the lowest
ranks, there is no principle of morality and
decency which is not deliberately undermined.
130 Chinas Business Methods.
Nor is the ' situation of the wife relieved
by the fact that the concubines are subject to
her authority, for the husband may, for sufficient
reason, degrade his wife to the level of a
concubine; and there is the unnatural provision
that the children of concubines are considered
the children of the wife, turning their backs
upon their own mothers to honor the wife, in
preference, with their affections and obedience,
and to mourn for her when dead instead of
their own mothers.
The doctrine of ancestral worship is the
basis of the custom and law of concubinage
and adoption, and there are no people who
cherish the doctrine with greater zeal and
devotion than the Chinese.
The living of China are in absolute
subjection to the dead of China, for it is a
reproach to any Chinese family not to have a
son to worship at the ancestral altar, which is
the sanctum sanctorum of every household.
A law that introduces the elements of
demoralization and unhappiness into a house-
hold, in order to make sure of a worshipper
at the ancestral altar, robs the example of
filial piety of its beauty and inspiration.
The members of a Chinese family are those
who live as members of the same household,
and this includes all who enter by marriage or
Family Law. 131
adoption, as well as slaves and servants.
There are within the family four degrees of
relationship, ** which are according to proximity
of descent, without distinguishing thereby
between consanguinity."
There is no law prescribing the age pre-
requisite for concluding marriage, but custom
has named the age of t wenty fo r males and
fift een for fem ales, and recommends suitability
of ages in that young girls should not marry
old men. If not mentioned in the marriage
contract, the non-attainment of puberty, insanity,
deafness, and dumbness would be impediments.
Eunuchs are not allowed to marry, though a
eunuch who had children before his mutilation
may visit his family, and some eunuchs, through
influence and intrigue, have formally married
and adopted sons as their successors.
*^ Those of agnatic relationship are prohibited
from marrying, and the prohibition applies to
cognates of the generation above and below, but
a cognate may marry of the same generation
not being agnate. No relationship is recognised
between the husband and his wife's sister, and
none between the relatives of the husband and
those of the wife.'' (MoUendorff.)
Relationship is determined by the family
name, and those bearing the same family name
do not marry. Of the 350,000,000 of China,
132 China^s Business Methods.
it is estimated that there are about 438 family
names, a fact in evidence of a sweeping
prohibition. At one time those composing
whole communities had the same surname, and
if a man wanted a wife he was compelled to
undertake a long and often expensive journey
for the purpose. But if the surname has two
distinct origins, and the line of ancestry can
be traced from separate stocks, the prohibition
is removed. There are, however, families of
the same ancestry who have branched oflF under
separate names, though they do not intermarry.
In such cases there was made a distinction in
the designation of the families, the one being
called the military family and the other the
family of the people, thus permitting inter-
marriage, although the surname was the same.
Impediments on account of affinity prohibit
marriage '*with sisters of the wives of
ascendants or descendants, with father's or
mother's sister-in-law, or with the sister of the
son-in-law. Marriage is also forbidden with
the step-daughter and with female relations
within the fourth degree of relationship, with a
widow of a relative of the fourth degree, or
with the sister of the widowed daughter-in-law.
Marriages with widows of a nearer degree are
considered incestuous, and decapitation is the
punishment of marriage with the father's or
Family Law. 133
grandfather's former wife, or with sisters of
the father, and whoever marries his brother's
widow is strangled." (MSllendorflf.)
The marriage laws of many ancient nations
permitted a widow to marry her deceased
husband's brother, provided she was childless,
and such was the law among the Jews before
Moses, but in China it is prohibited, though
it is stated that the Mohammedans in Peking
and the Chinese in the district of Huai-an, in
the province of Kiangsu, practise it. In
Deuteronomy, Chap. XXV, the marriage was
permitted to perpetuate the name and keep
the property of the family, but in China the
law of adoption gives the head of the family
the right to adopt an heir.
The period of mourning for a deceased
kinsman is so accurately defined, and the
ceremony so particularly described, that no
Chinese would fail to observe it. This duty
to ancestral memory is so seriously regarded
by custom and law that a marriage during the
legal time of mourning is prohibited, but an
exception is made in favor of a marriage with
concubines, and which is not punished "unless
either the bride or bridegroom is in mourning
for a parent, or the bride for her late husband,
even if the marriage had never been
consummated. It is considered to be a time
134 China's Business Methods.
of mourning for children or grandchildren if
father or mother or grandparent be in prison
for a capital oflfence.
" If a woman be seduced, the seducer is
prohibited from marrying her, and marriage is
forbidden with a woman who has committed a
crime and fled for fear of punishment.
Whoever forces the wife or daughter of a
free man to marry either with himself or with
a son, grandson, younger brother, or nephew
is to be strangled." (MoUendorfF.)
The principle of the Roman law, which
prohibited a guardian from marrying his ward,
or a tutor from marrying his pupil, applies
in China in the relation of tutor and pupil,
pronouncing §uch a marriage illegal and
incestuous, but the guardian is always a relation
and the law contemplates that a child can never
be without a relation to guard his interest.
If a widow remarries, the children by the
first husband come under the power of the
second, but, if with consent, a son of the
first husband should return to his father's
family, it then becomes necessary for him to
have a guardian; — **it is an orphan returning
to his ancestral family/*
B ut it is not the custon) in ChLp a-^£M: a
wiHnw^j^2,_rp-rnarry The maxim is : *^once
mated with her husband, all her life she will
Family Law.
not change, and hence, when the husband dies,
she will not marry again." There is no reason
for such a custom, except the purpose of both
Chinese custom and law to place woman, under
all circumstances, at a disadvantage and impress
upon her the servile position she occupies in
her relation to man. If the widow remains
with her husband's father or brother she will
be discouraged by them and, if possible,
prevented from marrying again. There are
instances where the widow has repudiated all
connection with the family of her former
husband, and then there is the other maxim :
"if heaven wants to rain,, or your mother to
marry again, nothing can prevent them." But
CUStO m is so strong in opposition fn a wiHq^
re-marr ying that the act is cons iriftrfiH inH^rpnt
^r\ (\ fr> rf^pppf Hipprnrp upon fipr f»m rlv When
a widow refuses all offers of a second marriage
popular opinion holds her in the highest
esteem, and for her faithfulness she may
receive an imperial reward in the form of a
gateway erected in the place where she lives. ^
The principle of the law that forbids an
official to hold office in his native province,
forbids him to marry a woman under his
jurisdiction, or who is the member of a family
interested in the performance of his official
duty ; and this principle of law, to guard against
136 Chinds Business Methods.
partiality, has been extended to prohibiting the
official, if related to one of the parties, to sit
as a judge. Inequality of rank, and the widow
of a man of rank, are impediments to marriage.
^'Buddhist priests and nuns, and those Taoist
priests and nuns who do not shave their heads
and plait their hair like other Chinese, in fact,
lay brothers, may marry. A priest who obtains
a woman under the pretence that she shall
marry another, and who then marries her
himself is severely punished. Marriage is
impossible between male slaves and free
women." (MSUendorflF.)
The impediments, although the marriage be
concluded, renders it null and void, and the
general rule is that the responsible parties are only
punished, if they knew of the impediments.
There is no dispensation in case of impediments,
and difiference of religion has no influence
upon marriage.
The constitution of a Chinese family and
the impediment to marriage being known, there
are six ceremonies prescribed for a regular
marriage, but, as indicated, the parties most
deeply concerned are not consulted. The
betrothal and consummation are managed by
the heads of the families,
"The father and elder brother of the
young man send a go-between to the father
Family Law. 137
and brother of the girl to inquire her name and
the moment of her birth, that the horoscope
of the two may be examined in order to
ascertain whether the proposed alliance will be
a happy one.
''If the eight characters seem to argue
aright, the boy's friends send the meujin back
to make an oflfer of marriage.
**If that be accepted, the second party is
again requested to return an assent in writing.
''Presents arc then sent to the girl's parents
according to the means of the parties.
"The go-between requests them to choose
a lucky day for the wedding.
"The preliminaries are conducted by the
bridegroom going or sending a party of friends
with music to bring his bride to his own house.
The matchmakers contrive to multiply their
visits and prolong their negotiations when the
parties are rich, to serve their own interest."
(Williams).
As the ages of the parties betrothed are not
legally material, the time intervening between
the betrothal and marriage may be a few months
or several years. If the families are friendly
the betrothal sometimes take place when the
parties are not over three or four years of age,
but the statement that unborn children may be
betrothed is not correct, the law forbids it.
138 Chinas Business Methods,
From one to three months before the day
selected for the celebration of the marriage, a
fortune-teller is consulted in order that a
fortunate day may be named, and also for
** cutting of the wedding garments, for the
furnishing of the curtains of the bridal bed, for
the embroidering of the bridal pillow, and for
^the entering of the sedan, on the part of the
bride, on the day of her marriage ;" and during
this intervening time certain presents are
presented, including the "cakes of ceremony,"
and all the ceremonies are arranged with the
minutest detail and minutely carried out.
After the signing of the contract of betrothal
by the heads of the families of the betrothed
parties, or by those having the authority to
sign, both parties may sue for the conclusion
of the marriage, and the party who refuses to
keep the contract is punished, and the court
enforces the marriage. If the contract is not in
writing the acceptance of presents is conclusive
proof of the agreement. A second betrothal of
the bride does not invalidate the contract/
unless with the consent or approval of the
family of the first bridegroom ; and forcible
abduction of the bride before the day named
for the marriage, or any delay on the
part of the bride's family after that day, are
punishable.
Family Law. 139
If it should be discovered before marriage
that false statements had been made, the
contract is annulled, and the guilty are punished.
If the false statements were made by the family
of the bride the presents are returned, but if
made by the bridegroom's family the presents
are kept by the bride and the guilty receives
a severer punishment, and here at least is a.,
discrimination in favor of woman. The discovery
of fraud after marriage is a cause for divorce,
or if the bride or bridegroom has been punished
for theft or fornication the contract may be
cancelled.
There is one document connected with the
contract of betrothal, and which passes before
the conclusion of the marriage ceremony, of
special significance ; it stipulates the sum to be
paid for the bride and corresponds to the
purchase of the ancient German and Greek
laws, and when the father of the bride accepts
the sum of money offered, he sells his daughter
to the family of the bridegroom, and Chinese
law ratifies the sale by the provision, that the
wife belongs to the family of her husband,
shall consider the parents of her husband her
parents, and shall legally mourn for them
longer than for her own parents.
"The ceremony of marriage was intended
as a bond between two surnames, with a view.
140 Chinds Business Methods.
in its retrospective character, to secure the
services in the ancestral temple, and, in
its prospective character, to secure the
continuance of the family line. Therefore the
superior man sets great value on it. Hence,
in regard to the various ceremonies, — ^the
proposal, with its accompanying gift; the
enquiries about the name; the intimation of
the approving divination; the receiving the
special oflferings; and the request to fix the
day; — ^these all were received by the principal
party, as he rested on his mats or leaning-
stove in the ancestral temple." (Legge.)
The marriage being concluded in a
public manner by the express will of the parties,
it is not regarded as a religious institution.
The law of China is similar to the Roman
and Canonical laws on the subject, before the
Concilium Tridentium (1545-63) made marriage
a religious institution and gave the Church the
opportunity to claim the right to decide in
matrimonial cases; it was then that the difiference
between Church and State began to divide
public opinion and disturb the peace of the
world, until a more enlightened sentiment has
about confined each in its proper sphere of
influence to the benefit of all.
The provision of the family law, which
defines the relation between husband and wife,
Family Law. 141
ought to silence those writers who would find
excuses for the servile condition of Chinese
women. There cannot be found in the law
code of any nation a provision so debasing in
its special requirements and in its general
scope, and against it the morals and humanity
of all lands should make the most determined
and persistent attack. The gentlemen and
official classes of China are the authors and
endorsers of the degradation of their women,
and should be made to feel, at home and
abroad, their responsibility for the laxity of
morals which they encourage by their practices.
The teachers of Christianity in China have
many superstitions and religious prejudices to
overcome, but all enlightened people can
consistently unite, whatever their beliefs as to
the efficacy of missionary work, in opposition
to the longer toleration, much less enforcement,
of a custom or law that recognizes woman as
the special subject for the baser passions of
man, and unfeelingly holds her in subjection to
them, entering the world, as she does, without
a blessing and leaving it without a hope.
In China the wife shares the rank of her
husband, but he can inflict corporal punishment
upon her at pleasure, and is free to violate
conjugal fidelity, while any such conduct by the
wife is a heinous crime, and if she disobeys
142 Chinas Business Methods,
her husband he mav sell her for a concubine.
She must render to hira implicit obedience,
must not leave home without his consent,
although the husband can travel with his
concubines, the wife shall remain at home to
take care of the children begotten either by
her or the concubine, with which the husband
is at liberty to fill his house as the witnesses
of her humiHty and slavery.
But if the husband should be the oldest
member of his stock and die, then the wife
has the power to manage the household and
family estate, and, after her death, the
property is divided among the sons, each of
whom registers himself as a new family or
household.
Unless otherwise stipulated in the contract
of marriage, the property of the wife, however
inherited or come into possession of, belongs
to the husband, who is not responsible for
her debts, except she was a sui juris before
marriage, or had no family, when the husband
would be liable. If the wife does not bear
children, the husband is not limited as to the
number of concubines, or he may contract with
a widow until he gets a son by her, and the
widow need not leave her former husband's
family, but carry out the contract under a
cover that should have remained ever sacred.
Family Law. 143
After the death of the husband, the wife
belongs to his family, and cannot leave it for
any cause without leaving her husband's estate,
and what she brought with her. At the moment
of marriage the ties of home and family are
severed, and the affection and loyalty of the
wife are required to be wholly transferred to
the family of her husband.
The natural cause of the dissolution of a
marriage is the death of either the husband
or wife, but there are other causes, and these
are prescribed by law. In addition to the
impediments to marriage, and which are causes
for divorce, the husband, if he catches his
wife in the act of adultery, may kill both
adulterers, but if the wife is not killed she
may be sold into concubinage, though the
money is forfeited. If the adulterer should
kill the husband, the wife is strangled.
A divorce may take place : —
" If both husband and wife are willing to
dissolve marriage, owing, e.g.^ to incompatibility
of temper.
" If the wife leaves the home against the
will of the husband ; should she marry whilst
absent she is strangled.
" If the wife beats her husband.
** If the marriage contract contained false
statements.
144 Chinas Business Methods,
** If the wife has one of the seven faults : —
barrenness, sensuality, want of filial piety
towards the husband's parents, loquacity,
thievishness, jealousy and distrust, or an
incurable disease.
"The husband, however, is obliged to keep
her in spite of one or several of the above-
mentioned faults if she has kept the full term
of mourning for three years after the death of
his parents, or if his family, having been poor
at the time of the marriage, have since become
wealthy; and, lastly, if the wife has no other
relations to whom she may return after the
divorce." (MollendorflF.)
The husband generally gives the divorced
wife, when she leaves his house, a bill of
divorce. The action for divorce is not as open
to the wife as to the husband; she can only
bring the action if she thinks there will be no
objection on the part of the husband. But if
she has been cruelly beaten by her husband,
the law taking no notice of moderate
punishment, or been deceived by false statements
in the marriage contract, or the husband has
become a leper, or has not been heard from
in three years, the action for divorce may be
begun by her.
When the marriage is dissolved the parties
are as free as if they had never been married,
Family Law. 145
and the wife returns to her family if they will
receive her, but the children remain with the
father, and the purchase money, when the
husband was not the cause of the divorce, is
given back to him. Should the family of the
wife refuse to receive her she becomes sui
juris. There can be no relationship through
the wife after the divorce. The laws of nearly
every nation carefully provide for the legality
of children born within a certain period after
the dissolution of marriage, but as to the
divorce of a pregnant wife in China, the law
is defective in this respect, though, after the
wife leaves the house of her husband, not ta
return again, the children born afterwards
cannot be claimed by him.
It has been stated that if the wife maliciously
leaves her husband and marries during his life-
time she is strangled, but the marriage of the
husband during the lifetime of the wife, without
legal separation, renders the marriage null and
void. Bigamy on the part of the husband
nullifies the marriage and the wife returns ta
her father, the purchase money being kept by
the father, unless he knew of the first wife^
and in that case it is forfeited, but if the wife
commits bigamy she is strangled.
If there can be any reason for the practice
of bigamy it does not apply to China, for the
10
146 China's Business Alethods.
husband can have as many concubines as he
wants. Marco Polo's account that Kublai Khan
had four wives, each dignified with the title
of Empress and provided with a separate palace,
may be the example followed by some wealthy
Chinese when they have had more than one
wife, but the example has few imitations, and
when followed it is only by the WjealthvY
The custom of polyandry '" ii^ttcojusively
confined to the prefectural city of T4ng Choa, in
the province of Fukien, whose inhabitants speak
^ ^e Hakka dialect. It is of local origin, and as
^jT'mgamy is practiced by the rich, polyandry is
practiced by the extreme poor. There are cases
where several brothers, by reason of their
poverty, have one woman and live with her
alternately. Where polyandry is practised child
murder is of common occurrence.
Another custom in China, is when a widow
marries a widower it is understood that,
spiritually, the widow belongs to her first
husband, and when she dies her family bury her
with him. The husband can marry immediately
after the death of his wife, but custom opposes
the re-marriage of the widow until she has
mourned three years for her deceased husband.
The doctrine of a doptio n is a most important
branch of the Chinese family law. L te main —
iHft?^ jc; t/^ i^i | i i In fill |l i.i f i^i^ iilj ij- and that the
Family Lam. 147
differences between families may also be
perpetuated it is provided that ^^ on ly children
^nt pf fn'^^li^ wh^ ^^n^ t^ ** ■ ^ «^'" family nam ^
may_J^€ — adopto d." The adopter is generally
older than the adopted, but there are no special
requirements, although the adoption of one's
younger brother or one's uncle, even if the latter
is younger than the nephew, is not allowed ; for
the same reason the uncle may not adopt a
nephew who is older than or of the same age
as himself. The one adopted may be adopted
as a son, daughter, or grandchild, but not as
brother, wife or concubine. It is estimated that
five per cent, of all the families in China possess
adop ted children, and as the adoption rests upon
purchase, a contract being made, the word
possession indicates the true nature of the
families' claim to the adopted.
Upon the death of the father his power
passes to the mother, and after her death to
the eldest son. If the son is an office holder
the father has no authority over him except
with the permission of the Emperor. The
father may give himself into arrogation and thus .^ jv^
place his children under the power of arrogation, ^ >^ ^^
or his power may cease with his will : — >f\A ^
'* By sale into adoption, by which the son
acquires agnate rights in the family of his
adopted father.
148 China's Business Methods.
" By sale rOf/ a daughter into marriage, she
becoming an agnate in her husband's family and
entering his manus.
"By permission to the children to enter a
religious order, they then lose their family name
and leave the family connection altogether.
**By exposing the children in tender age.
The finder may lawfully adopt them if under
three years of age. If older, they are not
allowed to be exposed, and only the ways
mentioned under the first and second of these
paragraphs are left to the father to rid himself
of his children.'' (Mollendorflf).
If an unmarried man gets a child by a girl,
he must marry her ; if he has a wife, he must
take her as a concubine, but in any event the
child is legitimate. Illegitimate children and
the children of p^OTtitutes bear the family name
of the mother and are under her power.
Note.— Marriage customs among the Tartars is described
by Marco Polo as follows: — "Any man may take a hundred
wives if he be able to keep them. But the first wife is ever
held most in honor, and as the most legitimate (and the same
applies to the sons whom she may bear). The husband gives a
marriage payment to his wife's mother and the wife brings
nothing to her husband. They have more children than any other
people because they have so many wdves. They may marry their
cousins, and if a father dies, his son may take any of the wives,
his own mother always excepted : that is to say the eldest son
Family Law. 149
may do this, but no other. A man may also take the wife of
his own brother after the latter's death. The weddings are celebrated
with great ado."
The custom that entitles the son on succeeding to take such
as he pleased of his deceased father's wives is evidenced by many
instances to be found in Hammer's or other Mongol histories.
The same custom seems to be ascribed by Herodotus to the Scyths.
A modern Mongol writer states that the custom of taking a
deceased brother's wife is now obsolete, but that a proverb
preserves its memory. (Yule.)
The marriage custom of Tibet is thus described by Marco
Polo : — " No man of that country would, on any consideration, take
to wife a girl who was a maid; for they say a wife is nothing
worth unless she has been used to consort with men. And their
custom is this, that when travellers come that way, the old women
of the place get ready, and take their unmarried daughters or
other girls related to them, and go to the strangers who are
passing, and make over the young women to whomsoever will
accept them, and the travellers take them accordingly and do
their pleasure; after which the girls are restored to the old
women who brought them, for they are not allowed to follow
the strangers away from home. In this manner people travelling
that way, when they reach a village or hamlet or other inhabited
place, shall find perhaps twenty or thirty girls at their disposal.
And if the travellers lodge with these people they shall have as
many young women as they could wish coming to court them.
You must know, too, that the traveller is expected to give the
girl who has been with him a ring or some other trifle, something,
in fact, that she can show as a lover's token when she comes to
be married. And it is for this in truth and for this alone that
they follow this custom; for every girl is expected to obtain at
least twenty such tokens in the way I have described before
she can be married. And those who have most tokens, and so
can show they have been run after, are in the highest esteem,
and most sought in marriage, because they say the charms of
such an one are greatest. But after marriage these people hold
their wives very dear, and would consider it a great villainy
for a man to meddle with another's wife; and thus, though the
150 China's Business Methods.
wives have, before marriage, acted as you have heard, they are
kept in great care from light conduct afterwards. Now I have
related to you this marriage custom as a good story to tell
and to show what a fine country that is for young fellows to
go to."
Such practices are ascribed to many nations. Martini quotes
something similar from a Chinese author about tribes in Yunnan ;
and Gamier says such loose practices are still ascribed to the
Sifan near the southern elbow of Kin-sha Kiang. Even of the
Mongols themselves and kindred races, Pallas asserts that the
young women regard a number of intrigues rather as a credit
and recommendation than otherwise. Japanese ideas seem to be
not very different. Aelian gives much the same account of the
Lydian women. Such is also stated to be the case with the
Indians of Tanto, the Laplanders in Regnard's days, and the
Hill Tribes of North Aracan. Mr. Cooper's Journal, when on the
banks of the Kin-sha Kiang, west of Bathang, affords a startling
illustration of the persistence of manners in this region. (Yule.)
Commercial Trend. 151
COMMERCIAL TREND.
Foreign trade was at the close of an old
chapter and at the commencement of a new-
one, according to Sir Robert Hart, in September
1900. He evidently anticipated early, great
and beneficial changes from any commercial
treaty that might follow the frustration of the
Boxer movement and the settlement of affairs
in the North. But the [Mackay] treaty, which
was precipitated by these events, is still
ineffective from the absence of agreement as to
certain more or less important details, but
chiefly because of the appearance amongst its
articles of a vexatious consumption tax on
native goods. What is required is a treaty 1
that will make some serious effort to meet all
the demands of present tradal relations with
China, and properly develop her jiiternal '
cmju»erG-e.. The coming treaty with China
should be simple. There should be one tax or
tariff, and one only, levied on imports at the
port of entry, the payment of which should
entitle the imported merchandise to go free
throughout the length and breadth of the
Empire. There is no instance in history where
V R R aTHN
152 Chinas Business Methods.
a nation with a system of internal taxation
similar to China's has ever grown rich : there
are many where the nations adopting it have
gradually become impoverished and finally
bankrupt. Not that the internal trade of China,
which has continued on its old lines for more
than thirty centuries, runs any such risk, but
that it is hindered from availing of opportunities
of expansion by a further continuance of its
domestic restrictions. England's position to-day
in commerce is largely due to a comparatively
unfettered trade. What would be the condition
of the United States with likin stations on the
borders of the several states ? Their common
prosperity is largely owing to the fact, that
once the import duty or tax is paid, the article
henceforth is free from any other levy whatever.
And so with home productions, there are no
likin stations or excise posts to hinder their
free movement.
The United States and China will bear
comparison in the fact that they are two fields
which offer every known advantage for the
prosecution of commercial enterprise. The
former country, unembarrassed with local
restrictions, has, within a quarter of a century,
attained its present place in the commerce of
the world, with an annual foreign trade of
2,285,040,342 gold dollars and a population
Commercial Trend. \ 53
of 80,000,000. What then might be the volume
of China's foreign trade, with her population
of 400,000,000, were she more happily
circumstanced ?
Before an acceptable finality is arrived at
in regard to the so-called Mackay treaty, which
can only be after each Great Power has had
its say, a time more or less lengthened is bound
to elapse, but it is to be hoped that an.
unmistakable agreement will be reached whereby
the first tax on imports into China shall be the
last and only burden.
Meantime imports are advantaged by a
revised tentative tariff, while the export duty
on tea is reduced by one half, i.e.^ from Tls. 2\
to Tls. i\ per picul.
Yet, in spite of these reliefs, complaint is
loud and frequent that trade remains in a most
unsatisfactory condition, particularly in the
larger interest of imports. Pouring goods
wholesale into a country without considering
the country's special requirements is not sound
or wholesome trade, and though such action
swells the commercial volume and adds materially
to the. national exchequer, its contributors can
expecjf to meet with little less than disappointment.
The inexorable law of supply and demand
sooner or later brings all things to their level. \
Meantime signs are not wanting that the near
154 China's Business Methods.
future is promising, and that the general
tendency is indisputably towards a material
expansion of the commercial trend. No student
of the authoritative returns of trade and trade
[reports for the year 1902, published by order
of the Inspector General of Customs, can rise
from the examination of this, its last issue,
without being struck with the comparatively
colossal proportions to which foreign trade has
attained, nor with the increasing variety of the
articles which contribute to the grand total.
There is an elasticity about the China trade,
conservative and so little known as the country
is, which not even such potent influences as
the Boxer movement of 1900, with its resultant
commercial upheaval and unrest in the northern
trading centres, nor the steady and serious fall in
exchange, which has proved so grave a burden
on all imported goods, nor the strain of the
Government to find the wherewithal to meet
its indemnity obligations, have been sufficient to
impair. And yet after all, what is commercial
China? Foreigners know little of it, for it is
admitted that during the past cycle foreign
trade, often pushed none too wisely but too
well, has done little more than just cross the
[ border. Neither has the trade grown, nor the
' revenue derived from it multiplied to anything
i like the extent the,framers of the early treaties
Commercial Trend. 155
anticipated and sanguineiy predicted, a state of
things accounted for in large measure by the fact
that the Empire is in itself so great, the people
so numerous, that sales to each other make up
an enormous and sufficient trade, and export to
foreign countries is unnecessary. "This," we
have it on the high authority of the Inspector
General of Customs, '* explains why sixty years
of treaty trade have failed to reach the point
the first treaty framers prophesied for it,"
while he further emphasises his view with the
assertion that **the foreigner can only hope to-
extend his business relations in proportion as.
he introduces new tastes, creates new wants,
and carefully supplies what the demand really
means." What the foreign trade of China
might be is shown by a comparison with Japan, ,
which, with a population less than one-seventh,/
spends almost as much as China on foreign'
goods; which, read in another way, simply •
means that China in a measurable time, if she
follows the example of her sister Empire, would
increase her foreign import trade sevenfold.
But before any such expansion of the
commercial trend can be looked for, domestic
trade must be relieved of the taxation of goods '
in transit, local industries must be assisted
instead of being hampered by excise and by
taxes on raw materials, and the enormous
156 China's Business Methods.
resources of the country must be developed,
while the imposition of any such levy as a
consumption-tax will result in lowering the
already low purchasing power of the humbler
trader, and so militate against the diflFusion of
trade.
The tradal possibilities of China, directed in
the right way, could only make for the expansion
of trade : and it may be that the figures of
last year's trade, viz. Hk.Tls. 529,545,489, or
approximately j^69,50o,ooo sterling, may come
to be regarded in the course of another decade
as Lilliputian.
It will not be necessary to go back to
early years in order to show the progress of
the march of trade. For present purposes the
statistics furnished by the lustrum, which
experienced such adverse influences as a
continous and steady decline in the price of
silver, and the commercial disquietude occasioned
by the political imbroglio of 1900, will suffice.
ANNUAL VALUE OF THE FOREIGN TRADE OF CHINA.
1898 to 1902.
Year.
Nut Imports.
Exports.
Total.
Hk. Tls.
Hk. Tls.
Hk. Tls.
1898
209,579i334
159,037,149
368,616,483
1899
264,748,456
195,784,832
460,533,288
1900
211,070,422
158,996,752
370,067,174
1901
268,302,918
169,656,757
437,959,675
1902
313,363,905
214,181,585
529,545,489
Commercial Trend.
157
From these figures it will be seen that even
in the year of the Boxer troubles, 1900, the
total was greater than it was in the first of the
five years under review, while the recuperative
power of trade is shown in the marvellous
total of 1902, which produced a revenue to
the Customs of Hk.Tls. 30,007,044, which was
Hk.Tls. 3,345,584 better than the collection of
1899, till then the highest on record. In fact,
the revenue in 1902, was 46^ per cent, greater
than it was in 1898.
The value of the imports altogether was
Hk.Tls. 315,363,905, and is approximately arrived
at in the following manner : —
Hk.Taels
Opium •.. 35,000,000
Cotton goods 27,500,000
Indian yarn 41,000,000
Japan yarn 12,000,000
Woollen goods 4,000,000
Metals 10,000,000 I
Kerosene oil 11,500,000
Coal ••• ••• ••• ••• 7)^^^)^^^
Matches 3,500,000
Rice ... ••• ••• ••• 23,500,000
Cigars and cigarettes ... 2,000,000
Sundries (Tls. 24,350,825 of
which are unenumerated.) 38,000,000
Hk. Tls. 3 1 5,000,000
158 China's Business Methods,
Imports were re-exported to the extent of
Tls. 10,000,000.
The value of the Exports amounted to
Tls. 214,181,584.
The chief staples represented being : —
Taels
Tea ... ... ... ... 23,000,000
Silk ... ... ... ... 79,000,000
Hides and skins ... ... 11,000,000
Raw cotton ... ... 13,000,000
Beans and beancake ... 10,000,000
Straw Braid ... ... 4,000,000
Sundries, including over 50
other specific articles ... 74,000,000
Tls. 214,000,000
The preceding figures should disabuse the
minds of those who consider that the China
tradal field is not worth the further working.
They show that the import trade figures not
only mark a great advance on those of 1901, but
are the greatest known in the annals of the
trade, and, as says the Statistical Secretary,
*^ should reassure those who imagine that China
is becoming poorer."
Noteworthy is the determined bid made by
America for a greater share in the cotton goods
trade. Of a total importation of 1,948,347
Commercial Trend. 1 59
pieces of drills of all kinds, America is credited
with supplying 1,741,103; of a total of
5,528,918 pieces of sheetings, 4,705,859 were ,
American goods: that is to say 85 per centra
of this important import is American. And it is
pleasing to note that this prosperity is well
deserved, for it is due to t he superior
grade of American cotton, its honest manufacture
and durability; and by virture of such superiority
American goods of this class hold an
incontestable position in the markets of China,
particularly in her fair possession, Manchuria.
It is estimated that about one-half of these
goods find their way into Manchuria : how
far their import will be stimulated and their
distribution increased under the Russian
occupation of that province is a question which
American shippers may well consider.
Equally worthy of notice are Germany's
efforts to further her commercial industries.
She is not only importantly represented in
the metal import, but she has the lion's share \
in what is called the ** Muck and Truck " 1
trade, and will be a most formidable competitor
in the woollen and fancy goods markets, in
which latter she wnll probably reign supreme.
For some reason or another woollen goods
do not find the favor in this Eastern market
that might be expected, and what demand there
^
i6o China's Business Methods.
is, is of a more or less capricious nature. The
jtotal value of the import is only ^^500,000
sterling, after half a century's trade. Once
supply a manufactured woollen that will '* catch
on " in some of the hungry marts in the interior^
and the demand will be responsive enough. It is
evident that woollens in their present forms of
camlets, lastings, long ells, Spanish stripes and
Russian cloth are not exactly what the Chinese
require. The ingenuity will be rewarded that
discovers the want and supplies it.
Nothing in the metal trade makes for its
growth. In 1886 metals constituted six per
cent, of the total imports; in 1896 they were
only four per cent.; in 1902 they fell to three
per cent, exactly. Nor is there anything
in the prospect, for when China begins to be
opened up and worked, the output of her
mines ought early to be large enough to render
■ her independent of imported metals. At present
I it would seem that metals had reached their
* high-water mark.
An article of spasmodic import, occasionally
of large proportions, is rice, but it is an article
which rarely interests or benefits foreigners
except in its carriage. In the past year, owing
to indifferent crops in the southern provinces^
there was such a demand for freight that some
9J30>654 piculs, or about 580,000 tons, were
Commercial Trend.
i6r
imported to relieve the situation, at a cost of
j^i, 278,000 sterling, representing an abnormal
amount of freight carried chiefly in foreign
bottoms.
There was an appreciable falling off in the
kerosene oil trade in 1902, a natural reaction
following the excessive imports of the previous
few years, which was conspicuously evidenced
in the Russian luminant, which returned to the
figures it stood at ten years ago, having fallen
from 32,486,070 gallons to 10,105,886 gallons.
There were also shortages in the receipts from
America of 12,500,000 gallons, and from Sumatra
of nearly 7,000,000 gallons. Oil has become such
a necessity and so great a trade that a comparison '
of the figures of the last decade cannot be
without their interest and instruction.
Imports of Kerosene Oil.
American ...
Borneo
Japanese ...
Russian ...
Sumatra ...
1892
••• 57,759,677
223,790
8,920
... 32,486,070
... 40,640,049
.. 131,118,506
1902
45,287,807
742,270
510
10,105,886
33,797,434
Gallons .
89,933,907
--America has for long years held its place
as the largest supplier of oil, but Sumatra is
11
i62 China's Business Methods.
rapidly entering into formidable competition^
while a big output may soon be expected from
Borneo and Burmah, to say nothing of
prospective supplies from the oil fields of
Szechuen and the Yangtze Valley.
In the long list of imported ''Sundries/'
valued at Tls. 136,948,982, or Tls. 17,000,000
higher than 1901, are articles to which the
attention of the foreign merchant, in the near
future, will be more seriously turned than it has
hitherto been, as they seem to suggest fields
of almost illimitable extent. There is not much
disposition at the present time to go out of the
beaten tracks of the trade, out of the staples,
in fact, but it is obvious that a vast expansion
is possible in such imports which so far have
been only '* lightly touched," as leather, ribbons,
aniline dyes, buttons, candles, cement, window-
glass, soap, machinery, etc., etc., etc. China is
self-supporting as regards flour, but heavy
supplies occasionally come in when the great
Pacific combines find themselves burdened with
excessive stocks.
Regarding Exports there is reason to believe
that they might be put down at a higher value
than the Tls. 214,181,584 as shown in the
Customs Returns, as the values adopted at
certain ports ** appear in many instances to be
too low," according to the Statistical Secretary.
Commercial Trend. 163
Of this large sum the great staples of silk and
tea account for Tls. 78,625,868 or .365 per cent.,
equal to one-third, and Tls, 22,859,829 or .108
per cent., equal to one-tenth of the trade
roughly, respectively.
Raw cotton was exported to the extent
•of Tls. 10,995,582, oils (especially wood oils),
Tls. 3,998,029, while beans and beancakes — for
which there is a large Japanese demand,—
bristles, feathers, hemp, animal tallow and
wool, all showed considerable advances.
An instance of a trade that is rapidly pushing
itself forward is that in sesamum seed. It has
risen from piculs 297,365 to piculs 882,302 :
that is, that it has trebled itself in a year,
owing chiefly to the opening up of new country
by the southern section of the Lu-han Railway,
which it is hoped is a foretaste of the general
development which may be looked for from the
.many railway schemes already in hand.
To get an idea, though possibly only a
very faint one, of China's productive capabili-
ties, one has but to turn to the Customs Annual
Report, where may be seen a list of fifty-seven
-enumerated articles, while the smaller and
unenumerated articles are found to be of the
value of Tls. 20,372,093, or over ^2,500,000
sterling. Many of these productions must be
almost unknown to foreigners except by name,
164 Chinas Business Methods.
and in their almost "infinite variety** it may
reasonably be anticipated will be found many
an unfurrowed field whose working should well
repay both enterprise and intelligence.
That trade with China will expand as the
country becomes more opened up permits of
little doubt. How to take the best advantage
of the great prospect is the question which
every merchant will set himself to answer. Over-
supplying an unresponsive market is not a
wise policy, though one but too frequently
pursued, and particularly senseless would sucb
action be in the case of a country like China,
which is not ** one homogeneous whole " in
respect of its tradal customs, but a coterie of
kingdoms, each with its own budget, its own
system of taxation, its own provincial views, its
own wants and necessities. What will suit one
province in the matter of foreign goods will
not suit another. It is the trader's part then
to discover those peculiar wants, and to
endeavour to minister to them.
More than one attempt has been made,
under foreign governmental influence, to acquire
such information with a view to benefiting,
their nationals. Seven years ago the Blackburn'
Chamber of Commerce sent out a commission
from England, who visited the various treaty
ports, and embodied the valuable information
Commercial Trend. 165
obtained in a voluminous report. In 1897 there
arrived in Canton a commission appointed by
the German Government instructed to study
carefully the needs of China and the best
methods of advancing the interests of German
merchants. At the time of the China- Japan
War, 1894, substantial service was rendered to
China by Russia, and the Russian representative
at Peking has not allowed China to forget the
obligation. A minister less fertile in resources
and diplomatic ability might have succeeded in
^ving a favourable direction to trade : but
Count Cassini has not only done this, but has
laid deep the foundation of its expansion by
opening up the long-desired highway from
European Russia, to the Pacific, thus pouring
isunlight into regions which have hitherto been
inaccessible to even the faint rays of a higher
civilization. It remains to be seen what
<:ommercial advantages Manchuria w^ll offer
under Russian control. All of these efforts make
for expansion. But though governments have
done something for their respective nationals, as
evidenced above, in obtaining information not
accessible or available except under authoritative
and political pressure, yet it must remain for the
individual trader to devote not only his capital,
but his intelligence, his industry, and his
concentration to the solution of the question how
t
1 66 China! s Business Methods.
to take the best advantage of the possibilities:
a further opening up of the country is likely
to aflFord. **But let negotiators be as painstaking
as you please, they and their governments only
lay the rails, so to speak, and the merchant
himself must provide the trains and find the
passengers/'
The customs, the habits and the prejudices
of the Chinese are primary lessons to be learned
before judicious calculations can be made for
business ventures ; and time and study are
required to master such lessons. This, as a
rule, is a lesson that the American merchant
has never considered of sufficient importance to
learn; for while other .countries have sent their
young men to China and placed them under
the tutelage of experienced business men, there
are but few young Americans who are being
trained in this common sense manner.
To those more immediately interested in
the China Trade the following table, compiled
from the Custom's Returns, has a special value
of its own. This quinquennial period, though
temporarily affected by quite abnormal influences,,
has passed through the ordeal not only
scathless but with lustre, and emerges with
results only too clearly confirmative of the
progress of the commercial trend.
Commercial Trend.
167
ANNUAL VALUE OF
THE DIRECT TRADE WITH THE
CHIEF CpUNTRIES for the years 1898 and
1902.
IMPORTS.
Country.
1898
1902
Increase
Taels.
Taels.
per cent*
Hongkong
97,214,017
133,524,669
38
Great Britain
34,962,474
57,624,610
64
Japan ... ... ...
27,376,063
35,342,283
30
India
19,135,146
33,037439
72J
Europe (except Russia) ...
9,397,792
18,484.678
96}
U.S. America ... ...
17,163,312
30,138,713
751
Singapore and Straits
2,620,128
4,108,926
56}
Russia, Odessa and Batoum
1,454,281
889,016
38 J dec.
Russia, Siberia and Kiachta
665
Russia and Manchuria
299,142
345,518
15*
Korea
952,307
1,260,999
32*
Other Countries
9,053,218
10,769,960
18}
Total ... Tls.
218,745,347
325,546,311
48J
EXPORTS,
Country.
1898
1902
Increase.
Taels.
Taels.
per cent.
Hongkong
62,083,512
82,657,375
33i
Great Britain
10,715,952
10,344,375
idee.
Japan ».. ... ...
16,092,778
28,728,294
72I
India
1,324,125
2,832,274
113}
Europe (except Russia) ...
25,929,114
39,728,637
53i
U.S. America
11,986,771
24,940,151
108*
Singapore and Straits
2,151,630
3,026,922
40J
Russia, Odessa and Batoum
5,004,991
3,793,905
24i dec.
Russia, Siberia and Kiachta
9,795,790
4,267,090
561dec.
Russia and Manchuria ...
2,997,426
2,850,611
idee.
Korea
1,086,748
1,043,428
idee.
Other Countries
9,868,312
9,968,522
line.
Total ... Tls.
159,037,149
214,181,584
34*
1 68 China s Business Methods,
From the foregoing tables will at once be
seen the giant strides of both the import and
export trades in the last five years, notwith-
standing events and influences which it may
reasonably be held would have paralyzed many
trades and retrograded more. The import trade,
however, in spite of abnormally deterrent
influences, increased in volume 48^ per cent.:
the export trade, stimulated by a legitimate
demand from the consuming markets, and
favored by a low exchange, expanded
34^ per cent. These are big percentages when
considered in relation to matters of small
moment, but are wonderful when applied to
an amount approximating fifty "inillion pounds
sterlings which was the value of the China
trade in 1898. If such progress as this, in
respect of imports, can be maintained in times
that have been ^^out of joint," what may be
expected when that time shall ^ome when a
greater steadiness in the value of the circulating
medium shall prevail and goods pass through the
land comparatively free of arbitrary provincial
exactions. China is a land of contradictions
and contrarieties ; so much so that where
one could elsewhere draw reasonable conclusions
from figures and facts and conditions with a
<:ertain amount of confidence, that possibility
vanishes in respect of the future in this great
Commercial Trend. 1 69
empire, where it is the unexpected that always
happens, in fact, ^* where things are not what they
seem." But looking at the chief imports, it
might not be beside the mark to forecast a
great increase in the consumption of the -endless
varieties of the articles coming under the head
of *' Cotton Goods;" and such a movement
would, doubtless, be accelerated if Manchester
were to take a leaf out of the American book
and remove the shoddy stigma which attaches
so strongly to her light textiles in general, and
to her fancy goods in particular.
The stagnant nature and the ridiculously
small proportions of the woollen trade are
■evidences clear enough that Bradford has not
yet hit her trade- nail on the head as regards
China markets. But it is absurd to suppose
that there is not a great future for all woollen
^oods, though there are those wedded to the
belief that the Chinese are indifferent as to
woollens which will come closer as enterprise
is directed towards the acquisition of an
intelligent appreciation of China's needs in this
line. It is a reflection indeed that only 48,000
pairs of blankets found their way to China in
1898.
The low range of prices that have recently
ruled for all kinds of refined sugars, lower than
that ruling for native produce, has brought them
I/O China's Business Methods.
into great favor, while continental beet sugars,,
in this, their first year of importation, have been'
placed on the market at so low a figure as to-
necessitate a large drop in prices all round ; so
much so that the foreign refined article, much
superior in every way, is now selling at rates
a tael below those asked for the native
product. There must exist an enormous demand
in this most populous land for sugars of every
description, and great is the field lying open*
for Continental manufacturers of beet.
The future is not so bright for the staple-
importations of metals, kerosene oil and coal,
for they must necessarily in time enter inta
competition with the similar products which
China is said to possess in more than abundance,
and which cannot much longer be allowed to*
remain unworked.
But though things in China hasten slowly,,
yet none the less surely do they progress, and
he would not do ill who began to trim his
sails and shape his course in anticipation of the
eventualities that loom.
Too numerous to mention in this place are
the thousand and one petty articles of import
which the Customs mass under the head of
**Unenumerated Sundries." Still they represent
an aggregate value of Taels 24,350,825, or
roughly ^3,000,000 sterling, in themselves a
Commercial 7 rend. 171
trade of no mean dimensions, yet capable of
indefinite expansion.
Local industries, notably cotton mills, have
not fulfilled the promise held by their projectors.
The common depreciation on the par value of
their shares is 60 per cent. Three causes have
operated against their successful working. One
the competition with India, with her abundant
cotton and cheap la bour, who, to meet the
whole of the then^'^rly China demand, fully
equipped eight mills; another, the. low exchange
whicb^sQ encouraged the export as to materially
raise^the_ normal price of the raw material; and
a third, the sharp competition between the
various mills for the raw material, a competition
which, assisted by the general advance in the
world's price of the staple, has driven the
price of cotton up some 40 per cent., that is^
from Taels 14 to Taels 20 per picul ; a
figure that puts profitable working out of the
question, if the market value of mill shares be
a criterion. On the other hand it is well known
that the Japanese are very heavy buyers of
Chinese raw cotton, can afford to ship it over
to Japan, work it into yarn, and reship the
product to China, where they are able to sell
it at a profit. From which it may be gathered
that no great progress has been made in the
rectification of the earlv mistakes of local milk
172 Chinas Business Methods.
management. Not only does the whole produc-
tion of the local mills, amounting annually to
135,000 bales, or 405,000 piculs go at once into
consumption, but the quantity of imported yarn
from Japan in 1902, 59,554,400 lbs.; from India
251,611,467 lbs., further added thereto, left last
year's demand unsatisfied. This special import, of
but a few years' standing, was last year of the
value of Taels 53,000,000 or two and one third
times greater than the once vaunted tea trade.
It stands now, as a tradal factor, second only
to silk, and it would seem destined at no
distant date to occupy the premier position.
The continuous depreciation in the value of
silver and the sympathetic decline in exchange
have not only favored the exports of the older
•staples of tea, silk, and the more recent ones
of hides and raw cotton, but have brought into
prominent notice numberless articles of natij'e
produce which had otherwise remained neglected,
if not, as in many cases, to all intents and
purposes, unknown. They have given an impetus
to the shipment of bristles, feathers, hair of all
kinds, hemp, matting, oils (bean, ground-nut,
tea, wood, rape, sesamun, etc., etc.), tallow,
wool, antimony, and of miscellaneous articles,
too detailed for enumeration in the Customs
Report, amounting to the value of over
Hk.Tls. 20,000,000.
Commercial Trend, 173.
The tea trade has •been aptly described as
moribund, a state of things for which China
herself is only too largely to be held responsible,
and it was the low exchange rates alone ruling
last year that rendered the shipment of the
commoner grades of tea possible. For years the
Chinese have been allowing the quality to
depreciate, and this, too, in the face of the
patent and aggressive competition of India and
Ceylon. So much has been written about the
decline of the China tea trade, and so well and
forcibly has it been put, that any reiteration of
its cause would now only come too late. The
palpable and unsatisfactory fact alone remains
that China has been almost completely ousted
from a trade once hers and hers alone, and
all hope of reassertion must unfortunately be
abandoned. It is quite true that the diversion
of her green tea trade from India to the
comparatively new Russian port of Batoum,
thus relieving the article of the heavy caravan
and overland charges incurred in its former
transport from Bombay to Samarkand and the
Caucasian provinces, has given a fillip to the
trade which cannot however be other than
ephemeral with the continuance of any such
prohibitory prices as natives have succeeded*
during the past two years in wresting from the
Parsee buyers for the new emporium. Further
174 China's Business Methods.
than that there is not an unlimited demand
for green tea. Both America and England
received unusually ample supplies last year,
fuller possibly than any increased consumption
would seem to warrant ; and when it is
remembered that China is now not the only
source of supply, but that India and Ceylon
are producers of magnitude already, it must be
acknowledged that the green tea trade of China
stands on very uncertain ground. To accentuate
this position the following figures lend them-
selves. In 1902, the total export of green
tea from China to foreign countries was
33,834,267 lbs.; in 1903, the third year of its
existence, the quantity of British grown green
tea alone available for export is estimated
to be 20,000,000 lbs. This must have the
indisputable effect of displacing no uncertain
proportion of the China article. It certainly
leaves no roseate prospect for the foreign trader.
Still China is a mighty tea producing
country. According to the Encyclopcedia
Britannica the internal consumption is said to
be 5 lbs. per head of the population, which would
be 2,000,000,000 lbs., the total export direct
to foreign countries was 213,662,867 lbs., making
the stupendous total of 2,213,662,867 lbs. Of
course, it is understood that the native used
article does not undergo the costly preparation
Commercial Trend. 175
of the shipped product, but is simply consumed
in the sun-dried condition. But the great total
remains there all the same.
It would not be reasonable to look for any
expansion in a trade which has permitted such
antagonistic elements to enter into successful
competition with it as have been indicated.
So long as fashion prevails, so long will
there be a demand for silk and silk fabrics.
A little more care bestowed on the rearing of
the worms, and greater precautions taken to
protect them against the variations in temperature
of the early summer, would certainly lead to a
crop superior in quality if not greater in quantity.
The trade in cocoons is a large one, chiefly in
the hands of a few French and Italian buyers,
but unbusinesslike competition amongst foreign
buyers in the country may bring about results
not dissimilar from those experienced by the
purchasers of cotton. However, the demand both
from Europe and America remains steady, and a
sound trade may be relied upon if prices on
this side do not exceed legitimate limits. The
steam filatures here, numbering about twenty-eight,
have reason to congratulate themselves on a
good years trade. The crop of white silk
shows no immediate sign of any increase upon
its normal size of 50,000 bales, but last year
witnessed heavier shipments of cocoons, refuse
176 China's Business Methods.
and Shangtung pongees. It is impossible to
obtain any reliable statistics as to the quantity
of silk used by the Chinese themselves, but it
is said by the very best authorities not to be
greater than the amount which passes into
foreign hands, which is of the trade value of
Taels 79,000,000, of which nearly Taels 60,000,000
is represented by other than white silks. On
the whole this trade may be said to be in a
sound position, particularly as purchases on this
side are, for the most part, made on users'
telegraphic orders, thus eliminating to a large
degree the speculative element.
Much has been said of the inferiority of
China grown cotton in all respects but of
its whiteness. It could be well wished
that the conservatism of China had not so
vexatiously and persistently blinded her to the
advantages of a favorable soil and climatic
conditions in the production of a grade of cotton
superior to that now produced ; but it may be
that her conservatism, in the absence of any
better epithet, may sooner or later give way
before more enlarged and enlightened business
connections, and that it may perhaps be
demonstrated that in China a grade of cotton
may be produced equal to that which whitens
the Mississippi bottoms or the uplands of Texas*
The present value of the exports of the raw
Commercial Trend. 177
materials is over Taels 13,000,000, the bulk of
which goes to Japan, whence it returns in the
shape of yarn, which is able to compete with
the heavily taxed home-made product. But
this is a trade unlikely to pass into any other
than Japanese hands.
The trade in hides and skins is a growing
one, and now reaches the respectable total of
Hk.Taels 11,000,000, and, if there be any truth
in the old adage that ** there's nothing like
leather," is one which the opening up of the
country by the coming "iron roads" should do
much to foster and to increase.
The strawbraid trade is, for the time being,
under a cloud, and for the past two years has
remained stationary in its export of 100,000
piculs. The reason is not far to seek, and is
found in the fact that the Chinese are following
their tea tactics, and producing an adulterated
and foul plaited article, and so marked is this
degeneracy that manufacturers do not seem
to care to work it up. As a trade it is
identical in value with the foreign woollen
trade with China, viz.^ Taels 4,000,000 but as
soon as the plaiters return to their honest
ways there should be and would be a material
development in the business.
As regards metals and minerals it only
remains to be said that when China shakes
12
173 China's Business Methods.
herself free of that conservatism which for longr
centuries has kept her wealth concealed in the
earth, she will be able to supply not only her
own needs, but the requirements of all the
countries of the world. Her products are not
only great in their variety but untold in their
qiuantity. Gold, silver, lead, copper, iron, coal,
5«itimony, mineral oil, quicksilver, etc., are hers
ia abundance; and to emphasize one source of
Wealth alone one need only point to that
g^eat coalfield lying in the south-east of the
province of Shansi, which, according to the
authority of Baron Richtofen, at the present
i^te of consumption alone could supply the
wprld for thousands of years. The impetus that
would be given to the import trade by the
wealth that would pour into the country from-
tbe release of her earth-hid treasures would
possibly pass any eflfort of present imagining.
There are already in China thirty open
ports whose trade passes through the Imperial
Maritime Customs. Their aggregate population is.
6,759,000, roughly one-sixtieth of the population
^f the empire. More open ports, in so far as
they would bring foreign goods in closer touch
with more buyers, suggest a wondrous expansion
of trade.
China has the whole world as her customer
could she be but taught to see it, and the
Commercial Trend. i79
wealth with which such a customer could invest
the land would re-act in all its fullness upon
the manufactories of the world.
Hence, if the facts and figures here before
quoted are to be depended upon, and the
premises of the contention, however inadequately
urged, be sound, the reasonable and logical
conclusion will be drawn that a vast expansion
awaits the present steady progress of the
Commercial Trend of China.
Chinese Weights, Measures, etc.
Note. — A very general impression obtains that weights and
measures in China are based upon the decimal system. This
is true to a certain extent, as may be seen on reference to some
of the following tables, but the system is far from universal, and
there does not appear to be any really reliable standard for either
weights or measures, the initial element in both cases being a
grain of millet seed, the equivalent of the English barley-corn,
while there is also a difference in both weights and measures
varying with the article to which they are applied.
And so with the currency. There is no single Imperial standard
of value for the silver tael applicable to the whole country. In
different provinces, in fact, in different ports in the same province,
the Customs' duties are paid in taels of different values, for
instance: — At Tientsin, Customs' Tls. loo are the equivalent of
local Tls. 105 ; at Chefoo, Customs' TI5. 100 are equal to
local Tls. 104.40; and at Shanghai, Customs' Tls 100, or Haikwan
taels, are payable at the rate of Tls. 1 11.40 Shanghai currency.
It is not difficult to see then, that other things being equal,
native produce will naturally find its way to that port where the
Area Table.
lO
ssQ = I haou or 24
lO
haou = I li or 24
lO
li =1 fen or 24
10
fen = I mow or 240
180 China's Business Methods.
duty burden is lightest, as it most surely does to those centres
where the internal embargoes are easier. For example :— green
teas used to find their way to Shanghai by river steamer from
Kiukiang, on the Yangtze, now they arrive by lighter from
•Hangchow, in Chekiang province.
Weight Table.
pu I tael =^ ij oz. avoirdupois.
I catty=ij lb. „
I picul=i33i lb.
„ 16 Hang (tael) = 1 chin or catty
100 mow = I ching. 100 chin = i tan or picul
Currency Table.
* 10 haou = I li or cash.
10 li =1 fSn or candareen.
10 fen = I ch'ien or mace.
10 ch'ien =1 Hang or tael.
*Cash is usually made up into "strings" of 1,000 cash.
Length Table,
= I ts'un == I inch
= I ch'ih =1 foot
«=a I pQ or kung.
= 360 pu =1 H, considered ^rd of a mile.
The measure of length is the ch*ih=i4.i inches English. The
measure of distance is the li=36o paces or 1,894.12 feet.
Land Measure,
- I^and is generally measured by the mau, 26.73 square poles,
English, the subdivisions being decimals. 100 mow=i6.7 acres.
Length Measure. — The measure of length, the ch*ih, or Chinese
fob^, varies with the different trades in Shanghai, which differ
again at most of the open ports.
10
f^n
10
ts'un
10
ch'ih
1,800
ch'ih
Commercial Trend. 1 8 r
Carpenter's chih = 11.14 Eng. inches.
Mason's „ 11.08 „
Artisan's „ 12.569 „
Board of Revenue's „ 13.181 „
Tailor's „ 13 85 to 14.05 „
Custom House „ 14.098 „
Junk builder's „ 15.769 to 15 69 „
Area Measure. — There are three kinds of "mow." One consists
of 240 square local pfl, another consists of 360 square local
pfl, while the third consists of 720 square local pQ, official standard:
Weight Measure. — Just as in English there are various weights,
so in China, where the sh'ih varies from 280 catties for rice,
260 catties for wheat, 150 catties for barley, I2D catties for rye,
100 catties for ground nuts.
In Tientsin, Peking and Shenking, amongst other places, cash
notes circulate, because convenient to handle, while they admit
of no exchange of debased coinage. The ordinary denominations
vary from 500 to 5,000 cash.
Capacity measure is the taw, made of wood, in shape like
an inverted pyramid with the top cut off. It holds generally
6J catties, or 9.67 lbs. English.
Frequent and serious have been the efforts made both by
missionaries and foreign officials to obtain an approximate idea of
the cost of collection of taxes in China, and any results arrived at
have been rather matters of guess-work than anything else. As
a rule taxes are farmed, and it follows as a natural consequence
that the difference between the gross and the nett receipts varies,
amongst other things, according to the rapacity of the collector ^
the pliability of the people, the needs of the district, the bounty
of the harvest.
The chief revenue producing tax in China is the land tax: at
present a burden felt by none, as the absence of agitation and
unrest would suggest. For the year 1903, it is estimated to
produce taels 27,000,000 for Imperial purposes at Peking, that is
6 J candareens, or less than zd, per head of the population. Butr
i82 China's Business Methods.
•of course, the sum that reaches the Central Government can be
but a fraction of the initial collection.
A German authoritative statement of the revenue derived
from the land puts it down as Taels 30,721,003, but the amount
actually received is Taels 25,087,000, showing the very moderate
cost of collection as only 17 per cent. But the real receipts
cannot be ascertained as far as foreigners are concerned, because
each individual province has its idiosyncratic mode of collection.
For instance, not long ago, the collector of Customs at Canton
had to furnish a sum of Taels 1,300,000, it being well known that
the gross receipts of his office fell little short of Taels 3,000,000
annually. On what product was the exceptional demand levied?
A former British plenipotentiary. Sir John Davis, attempted to
make this question his own, but all that he could discover was
what has all along been practically known. From the produce
of taxation in each province the treasurer of that province deducts
the civil and military expenses, and all outlays for public works
and otherwise, remitting the surplus to Peking either in money
or in kind.
The difficulty then of ascertaining the real expenses that
attend the administration of the whole Empire arises from the
surplus being the only point that has been clearly ascertained, as
well as from a large portion of the taxation being levied on
commodities, grain, silk, stores, etc. As an example of the
"leakage" that occurs in the transmission of a tax — and the
Virgilian precept ex uno disce omnes might well hold good in
this connection— the instance of the case of Shasi on the Yangtsze,
derived from a high foreign official source, is adduced.
"The town, Shasi, is assessed for likin at Taels 200,000, and it
may be supposed that this is somewhere near the sum annually
credited to the public accounts of the province. It is paid to
the Putai, or Governor of Hupeh, not, as in some other provinces,
to the Fantai or Provincial Treasurer." But the sum credited
to public accounts differs from the amount levied in several
important respects. The tax is farmed, the officials in charge
being responsible for a fixed quota for each month of the year.
For some months, e.g., the first, the quota is fixed at a low
figure; for others, e.g, the second, at five times as much. But
OF
Commercial Trend. 1^3
-collecting officers are able to collect more than the quota in every
month. This is done by frequent alterations in the tariff, so that
no one ever knows how much is properly due, by grouping
■commodities into broad classes, levying indiscriminately on the
class without enquiring into the actual value of each article, and
by permitting the falsification of manifests. Thus a merchant,
desiring to pass loo piculs of produce, reports it as 50 piculs, and
pays duty on it as 70 piculs, for which consideration the local
i^ollector passes the remaining 30 piculs free. As a similar system
prevails from one step to the next through a hierarchy of offices, it
is currently believed that only 10 per cent ! of the likin ever reaches
the Provincial Treasury for application to public purposes. This
may be an extreme case, but it is significant of the principle tfctt
pervades the whole system of taxation. By analogy, the land iMX,
which last year produced Taels 62,500,000 for public purposes,
should be the residue of an original total of Taels 265,ooo/)0o.
Briefly, then, eliminating the Taels 17,000,000 collected by the
foreign inspectorate of Customs, which, of course, is above
suspicion, the gross revenue of China last year might reasonably
be estimated to have been five times as great as the Taels 71,000,000
paid into the Imperial Exchequer.
Native officialdom is not likely to throw any light upon
this interesting question of the cost of collection of taxes, aittil
any other statements concerning it can only be accepted as tde
offspring of surmise and speculation.
184 China's Business Methods.
INTERIOR TRADE ROUTES.
As foreigners can now travel in all parts
of China, either for business or pleasure, it will
be of interest to note some of the old and more
important interior routes which travel and trade
must still follow, notwithstanding that the railroad
is pointing out new ways which will, ere a great
while, unite the different parts of the Empire
by shorter and quicker means for transporting
passengers and freight. There are several
excellent maps of China which show the lines
and mileage of railways already constructed
and in contemplation of being constructed, and
by observing one closely, the old routes, which
have so long been in use by the natives, may
be traced as indicated in this chapter.
Oiifgi'dp nf thft foreign settlements, .with^iheir
macadam jypid -streets^ there. is scarcely .a roadjn
the whole Empire that deserves to be called a
road. Exception must be made of a drive
some five miles in length, recently built by
Chang Chi Tung at Nanking, and a few miles
of roadway, built some years ago at Tientsin
under the direction of Li Hung Chang, the
Interior Trade Routes. 185
beginning of a highway to Peking. The road
through the pass from Nan-keo to the Great
Wall is also fairly well built and kept in
tolerably good condition.
The ordinary road is a mere path, generally
undefined by ditches or hedges, winding through
the paddy fields or over the uplands, wherever
the traveller can find the fewest obstacles ta
his progress. In the North, where carts are used,
it is a common thing to see a new track cut
right across a field of growing wheat in spite
of the efforts of the owner to prevent it. A
few attempts have been made at various times
in the past to construct good roads, such as
those from Tung-chow to Peking, Hanchung to
Chingtu, and from Nanking to Fungyang, but
for lack of proper repairs they were soon-
permitted to fall into ruin. The road from
Nanking to Fungyang, 120 miles in length,
was built by the founder of the Ming dynasty,
who made Nanking his capital. It was a
creditable piece of engineering. The roadway
is some twenty-five feet wide, and in some
places built up twelve to fifteen feet above
the surrounding country. There are remains in
many places of ancient pavement, but this has
almost wholly disappeared, and the road is
simply a bank of earth which in rainy weather
becomes altogether impassable. There are three
i86 China's Business Methods.
splendid bridges on the road, built of stone, one
of five, one of seven, and another of ten arches.
Bridge-building is regarded as a virtue in China,
and there are some fine specimens in all parts
of the Empire. In the neighbourhood of the
cities in central China the roads are partially
covered with a pavement about five feet wide,
composed of old brick set on edge, with
sometimes a line of cut stone in the middle
for wheelbarrow traffic. On the larger rivers,
which Chinese engineering skill has not been
equal to bridging, there are ferries on which
men and animals, carts and barrows, are carried
across for a few cash. For crossing the Yangtsze,
at Nanking, the fare is 35 cash (2 cents United
States money) for each passenger, 100 cash (5
cents United States money) for a donkey, and
150 cash (8 cents United States money) for a
horse. Considering the wages paid, these rates
are exorbitant. In many places relief is hopeless,
since the ferries are in the nature of monoplies
protected by the local ofiicials. In contrast
with this rule is the establishment occasionally
of a firee ferry by charitably-disposed persons
who wish to store up a little merit against the
day of settling in the world to come.
At present the least possible amount of
money is spent in the making or repairing of
roads. Sometimes improvements are made by
Interior Trade Routes. 187
private enterprise, but nothing of a substantial
•character is done. Where dykes are built along
the banks of rivers or canals they become
public thoroughfares, and as they must be kept
in fairly safe condition, they may be counted
amongst the best roads in the country. Under
such circumstances land travel is difficult, tedious,
and disagreeable. In the transport of goods
there is great economic waste. In bad weather
there are long and vexatious delays. The roads
in the North are cut up by cart wheels into
deep ruts, which minister to the wrath and
agony of the traveller and the destruction of
any wares of a breakable character. Eight and
ten horses may be seen at times tugging at
a loaded cart which, on a western highway,
ivould be drawn by a single team. In central
•or southern China, except in treaty ports, the
only wheeled vehicle seen is the wheelbarrow,
which is used both for passengers and freight.
In transporting freight, the barrow men travel
in companies and aid one another over difficult
portions of the road. This is also a protection
against robbers, who infest certain districts. A
single barrow man will sometimes wheel 400
<:atties (533^rd pounds). The ordinary load is
200 to 300 catties. For land travel, the
principal means of conveyance are the sedan
'Chair, the mule litter, the cart (used only in
1 88 China's Business Methods.
the North), horses, mules and donkeys. The
most comfortable is the chair, but the use of
this is denied to ordinary people in Peking and
vicinity. The most expeditious is the horse.
For transportation there are barrows, pack horses,,
mules, donkeys and camels. Journeys are
divided into stages of about 30 miles each, but
the first stage on leaving a large city or the
last on approaching it is always a short one,
perhaps 15 or 20 miles. By forced marches
a traveller can do much more than the ordinary
stage, but he will find himself put to many
inconveniences by being obliged to stop in small
villages where no preparations are made for his
entertainment. Even where such accommodations
are found at the usual stopping places, they are
of the rudest sort. The best are those found
in the highway from Tientsin to Peking. A
large courtyard, half filled with carts, is
surrounded on the four sides with one storied
buildings of burned or unburned brick, covered
with tiles or thatch. In these buildings are
found the stables, kitchen, sleeping rooms, and,
on the side next the street, a tea house or shop^
The bed at night and the table by day is the
kang or brick structure, which is heated by
flues passing through it. The rooms are fairly
clean, sometimes papered; the fare, pork or
mutton, with vegetables, is savory, and the
Interior Trade Routes. 189
charges exorbitant, as compared with other
parts of China, due no doubt to the great
number of ** globe trotters" who pass up and
down, and pay whatever the "Tientsin boy"
may say. Through the central provinces the
inns are much less comfortable, built usually of
beaten earth and covered with thatch, the floor is
the native unsmoothed ground. You share your
room with five or six other travellers, some of
whom probably smoke opium until the small
hours of the morning. The room may have a
door, but is often without one. A small opening
in the wall on one side is barred with a wooden
lattice, which at one time was covered with
paper, but this has been torn to shreds. A
couple of trestles, supporting four or five narrow
boards, form the bedstead, on which you spread
your own bedding, to be thoroughly infested
with fleas and other vermin before morning. A
saucer with a spout contains a little oil, in
which a bit of wick is placed, and forms the
lamp. There is a rude table for your meals
and a trestle for a seat. The waiter brushes the
bones and leavings of your humble repast on
the ground, where a hungry dog is waiting to
gather them up. In the smaller villages, your
animals will be stabled in your bedroom and
the whole village will assemble to see you eat
or go to bed.
I go China's Business Methods.
Travel by boat is by far the most convenient
and most comfortable method in the Empire.
In the maritime provinces and the Yangtsze
Valley waterways are numerous. A number of
steamship companies are running steamers
regularly on the Yangtsze as far as Ichang, and
sometimes beyond. Boats leave Shanghai and
Hankow daily, except Sunday. There is steam
communication between Shanghai and Soochow
and between Shanghai and Hangchow, also
through the canals connecting these cities-
Elsewhere, as yet, steam is forbidden and one
must depend upon the native houseboats,
which are of various sizes but can be made
comfortable. One must be prepared to suflFer
long delays at times when the wind and tide
are unfavorable. The cost of travel and
transportation varies in diflferent ports of the
Empire.
In central China, chair bearers will receive
360 cash (20 cents) a day apiece; in the southern
provinces, twice as much. A donkey, with a
boy, will cost 250 cash (14 cents) per diem
without food, or 200 cash (11 cents) for one
who furnishes food for the beast and his driven
A horse or mule will cost 300 to 400 cash
(17 to 22 cents); a wheelbarrow, for passenger
and his luggage, 400 cash (22 cents). The
barrow will not make over 18 to 20 miles in a
Interior Trade Routes. 191
day. Mule litters cost from 50 to 75 cents per
diem, and carts from 50 to 80 cents. In the
central provinces, food and a place to sleep
will cost 200 cash (11 cents) per diem. In
the North it may cost 50 cents to $1 Mexican
(25 to 50 cents).
Boat travelling is much cheaper. On the
smaller boats each person will pay 120 cash
{7 cents) for one day's journey, which is about
100 li, or 33ird miles. On the larger boats,
where there is no competition with steamers,,
as on the Grand Canal, 185 cash (10 cents) a
stage is asked, and where there is competition
with steamers this is cut down to 133 cash
(8 cents). In addition, one must pay wine
money and incense money, the latter to
propitiate the gods and secure good weather.
Food on the boats is usually extra, and costs
some 35 cash (2 cents) a meal for rice. The
passenger tariflF on jthe river steamers depends
upon the amount of competition. At present
native fares on the Yangtsze are very low,
about 50 cents for every 100 miles. This
includes two meals a day. Foreign rates are
about $4.80 for 100 miles.
The cost of carrying goods varies with the
means of transportation, A donkey will carry
100 to 150 caities (i335rd to 200 pounds),
and will cost 20Q to 300 cash [\\\ to 17 cents)
192 Chinas Business Methods.
for each day, with extra for food for the animal
and his driver. One driver will take a number
of animals. A horse or mule will carry 240 to
320 pounds, and will cost 350 to 500 cash
(20 to 28 cents) a day. Camels will carry still
more, but are used only in the north, where
the cost is about 28 to 34 cents a day. A
wheelbarrow will carry, as a rule, 180 to 300
catties (240 to 400 pounds), and will make about
16 miles a day at a cost of 17 to 28 cents.
Where carts are used, freight is about 25 cents
per picul. The average cost by land is estimated
at 290 cash (16 cents) for every picul — that is
I33^rd pounds carried lOD li (33ird miles).
Water freight is much cheaper. A boat
capable of carrying 100 piculs may be hired at
1000 cash (44 cents) a stage, or at 600 cash
(34 cents) per diem. Large boats, with a capacity
of 300 piculs each, can be hired at 60 to 90 cents
a day. The average cost by water will be about
7 cash for each picul for 100 li, wine and
incense money extra. Freight rates on steamers
lare not fixed, but vary from time to time.
They are reasonably cheap. The principal
native trade routes are the following: — From
Tientsin by river to Tungchow, thence by land
to Peking, or by land the whole way from
Tientsin to Peking (there is now a railway
between the two cities); from Peking through
Interior Trade Routes. 193
the Nankeo Pass to Kalgan, and thence to
Kiakhta and Siberia. There is an old road
from Peking northeast into Mongolia, one branch
of which leads to Shanhai-kwan and thence
to Kincheo, Moukden and Kirin. But there is
now a railroad from Tientsin direct to Shanhai-
kwan, and as there is an open port at New-
chwang, the trade of Moukden and Kirin, as
well as of the Liaotung Peninsula, naturally
passes in and out at this port.
From Peking there is a road to Paoting-fu
and also water communication from Tientsin to
that city. The great northern route runs from
Paoting-fu to the West, going vid Taiyuen-fu,
the capital of Shansi, thence to Pucheo,
on the Yellow River, which is crossed by
a ferry, and from this point to Singan-fu,
the capital of Shensi, and from thence to
Lancheo, the capital of Kansuh, and beyond
to Urumtsi, or by another route to Yarkand
and Kulga.
From Taiyuen-fu a branch road goes
westward, vid Fungcheo and Yungningcheo, to
Ninghwa, in Kansuh. From Lancheo another
road goes to Chengtu in Szechuen. It is forty-
eight days' journey from Peking to Lancheo, and
fifty-eight thence to Chengtu. There is also an
important road from Paoting-fu leading to the
southwest viSi Shunteh-fu, and thence to
13
194 China's Business Methods.
Kaifung, the capital of Honan, whence various
roads diverge, the most important perhaps being
viA Cheohiakeo to Hankow, whither one may go
by land or partly by land and water. Another
road leads to the West from Kaifung to
Tungkuan, where it joins the main line to
Singan-fu, mentioned above. Another road
leads South by way of Fungyang-fu in
Nganhwiu to Pukeo in the Yangtsze Kiang,.
opposite Nanking. From Tientsin there is
connection also with Shantung and the south.
The Grand Canal is practically worthless in
its northern portion, and from Tsining to
Lintsingcheo is used by the tribute rice
boats, which are annually dragged through
to furnish employment to those whose
interest in the traffic the Government seems
unwilling to disturb. It must be understood,
however, that but a small part of the tribute
rice now takes this course, most of it going by
steamer to Tientsin. The Yellow River, though
crossing all the northern provinces, is not utilized
except for local traffic, although it is said by
competent engineers that it can be made
navigable as far as Kaifung-fu.
From Chefoo there are roads inland to
Weihsien, Laicheo, Tsingcheo, and the capital
of Shantung province, Tsinan-fu, where connec-
tion is made with other roads North and South.
Interior Trade Routes. 195
The great artery of commerce is of course
the Yangtsze River which is navigable for some
2,000 miles. Steamers ply between Shanghai
and Ichang about 800 miles. Above this point
navigation is made somewhat diflSicult by a series
of rapids, and the Chinese Government for a
long time successfully opposed the introduction
of steam, although the diflSicullies are not
insurmountable and steamers run some distance
beyond Ichang. The American stern-wheel boats
would be able easily to ascend the rapids. A
boat of this sort was indeed built for the
purpose, but permission to use it was not
obtained. As there is now an open port at
Chungking steam communication with Szechuen
has been obtained. But communication is also
kept by native boats, which are dragged through
the rapids by towlines hauled by men.
From Chinkiang, 156 miles from Shanghai,
communication is North and South by the
Grand Canal, which is available for large junks
from Hangchow to Tsinkiangpu, where connection
is made by the Hwai River with northern
Nganhui and Cheokiakeo, the great distributing
center of Honan. This is the most natural route
to these districts, but owing to the heavy likin
charges the greater part of the traffic goes vid
Hankow or across from Nanking overland. In
fact, much traffic is diverted from all the main
196 China! s Business Methods.
channels by likin charges, and a great deal of
distribution is done by byepaths. An extension
of the canal supplies good navigation to Tsining
in Shantung, and rice boats, as said before,
are taken clear through to Peking. A perfect
network of waterways, partly natural and partly
artificial, in Kiangsu, is connected with the
Grand Canal and the Yangtsze, and furnishes
cheap and comfortable communication with all
parts of that province.
From Nanking, a caravan route extends
from Pukeo, on the North side of the river,
to Fungyang-fu, 120 miles, with connection
beyond to the North and northwest, connecting
with the Hwai River route, and farther on
with the great northern road to the western
provinces.
From Wuhu there are waterways inland
both North and South. From Kiukiang, via
the Poyang Lake, there is good water communi-
cation with Nanchang-fu, the capital of Kiangsi,
and thence overland by the Meiling Pass
to Nanhiung Cheo in Kwangtung, from which
there is water communication by the eastern
branch of the North River. Before the
development of steamship traffic, by the opening
of the treaty ports, trade between the central
provinces and Canton all went by this route.
From Kiukiang northward, there is a highway
Interior Trade Routes. 197
to Lucheo, where connection is had with
Nganking on the one side and northern Nganhwui
on the other.
Connection between the Yangtsze Valley
and the South is also had vid the Siang River
to Ningyuen Hsien, and thence overland by two
routes, one into Kwangsi and the other to
Lincheo in Kwangtung and by the North River
to Canton.
Through the Tungting Lake, by the Chang
River, communication is made with the provinces
of Kweichou and Yunnan.
The most important center on the Yangtsze
doubtless is Hankow, whence there is an
overland route north-east into Honan and thence
to Peking, and a water route vid the Han and
T'ang Rivers to the same region.
A very important trade route is from
Hankow by the Han River to Lao-ho-keo and
thence by boat to Kingtsih-kuan, and from
there by mule over the mountains to Singan-fu,
where connection is made with the roads
mentioned above. The principal trade route
into Szechuen is naturally by the Yangtsze,
but from Chungtu there are roads branching in
various directions : one, called the Great South
Road, leads to Yachou, two days beyond which
place, at Tsingli Hsien, it divides, one branch
going West to Tatsienlu, Litang, and on vid
198 China! s Business Methods.
Batang to Lhasa, the capital of Thibet, 1,500
miles from Chingtu, the second branch connected
with Yunnan by the valley of the Kienkiang.
The Great East road connects Chengtu with
Chungking, 340 miles. The Great North road
leads to Singan and thence to Peking. The
West road furnishes communication with
Sungpwan and Kokonor.
From Chungking, there is connection by
water with Lucheo-fu, whence there is an
important overland route to the capital of
Yunnan. At Lucheo it is joined by a road to
Chungtu. A more popular route to the north-
east from Yunnan-fu is by Kweiyang, the capital
of Kweichow, through Chengyuan on the river
Chang, down through Honan to the Yangtsze,
a route referred to above.
From Yunnan-fu, the chief trade route is
overland vid Mengtsze to Manhao and thence
by boat to Laokai, and from that point down
the Red River to Haiphong, in French Tonkin.
It is twenty-one days by this route from
Yunnan-fu to Haiphong. This is the most
natural route from the South to Szechuen.
The old tribute road from Burma to Peking
passes through Yunnan-fu, coming from Bhamo
by way of Tengyueh and Tali-fu. It is about
350 miles from Yunnan-fu to Tengyueh and
seven days from the latter place to Bhamo.
Interior Trade Routes. 199
This route has been proposed for trade with
British Burma, but is regarded as an impossible
one by some of those who have been over it,
owing to the natural difficulties. It crosses
nine distinct mountain ranges by lofty passes
accessible only by very steep paths. Engineers
have, nevertheless, indicated a practicable route
for a railway in this direction. A better route
is said to exist by the Irrawaddy, from whose
head waters there is easy connection with the
highway from Lhassa to Chingtu.
From Mengtsze, there is another route of
importance, which connects with Canton by way
of the West River. It is 350 miles from
Mengtsze to Poknay, the head of navigation on
the left branch of the West River, whence a
boat journey of a month or more will bring
one to Canton. From Poknay there is
connection also with Kweichow. By leaving
the West River below Nanning-fu at Nanhsiang,
a land journey of three days and a water
journey of seven more will bring one to
Pakhoi. The West River seems the most easy
and practicable route to this region, but here,
as elsewhere, undue exactions in the way of
likin dues have diverted the bulk of the trade
into other and more difficult routes. From
Wucheo, on the West River, there are land
routes to Kweilin and Nanning, and from Nanning
200 China's Business Methods.
to Peiseh and Lungcheo, whence there is
connection overland through Tonkin ta
Haiphong. The foreign goods for Lungcheo^
Nanning and Peiseh come mostly from Pakhoi
instead of by the natural route, via the West
River, from Canton.
From Pakhoi to Nanning, by the usual
trade route, is 260 miles, all but 53 miles
of which may be made by water. From
Nanning to Peiseh is 283 miles by water, and
thence one can go directly to Yunnan-fu, which
is 600 miles by land. The French have
secured a concession for the construction of a
railway from Lungcheo to Chengnaokuan, where
it will connect with the Tonkin system of
railways, this will give the French port some
advantage over Pakhoi.
The above general summary places before
the reader some of the principal trade routes
over which the Chinese carried their produce
and merchandise long before the beginning of
the Christian Era.
Educational System. 20 1
EDUCATIONAL SYSTEM.
The attachment to ancient customs and
respect for authority, which are leading
characteristics of the Chinese, are the result of
their educational system ; and in the writings
of no one are these principles inculcated as
first duties with such earnestness as in the
writings of Confucius.
It may be said that the educational system
of China is based on the writings of Confucius^
and that as fast as the Chinese mind develops
Confucian precepts are instilled ; and these pre-
cepts shape and govern the moral and political
future of the Chinese boy and man.
In order, therefore, to have some insight
into the mental condition of the Chinese, and
the reason for acts that would otherwise appear
incomprehensible, this chapter will be devoted ta
a general examination of the chief branches of
instruction in their schools, and to a few
extracts from the writings of Confucius, and
which, in justice to the reader, should be
presented as translated and summarized from,
the clear language of Hue.
^02 Chinas Business Methods.
The chief branch of instruction in the
Chinese schools is that of reading and writing,
or painting, the Chinese characters. To exercise
the hand of the pupil, they oblige him to
practice, first the elementary forms that enter
into the composition of the letter, and then to
proceed gradually to more complicated combi-
nations. When he can make a firm and easy
stroke with the pencil, then beautiful examples
of various styles of writing are given him to
copy. The master corrects the work of the
pupil in red ink, improving the badly drawn
characters, and pointing out the various beauties
and imperfections in the copy. The Chinese
set great value on fine writing ; and a good
caligrapher, or, as they say, ** an elegant pencil,"
is always much admired.
For the knowledge and good pronunciation
of the character, the master, at the beginning
of the lesson, repeats a certain number to each
pupil, according to his capacity. They then all
return to their places, repeating their lessons in
a chanting tone, and rocking themselves back-
wards and forwards. The uproar and confusion
of a Chinese school, in which every pupil is
vociferating his own particular monosyllables in
his own particular tone without at all troubling
himself about his neighbor, may easily be
imagined. Whilst they are thus chanting and
Educational System. 203
rocking about, the master of the school, like
the leader of a band, keeps his ears pricked,
and attentive to all that is going c^n, shouting
out his amendments from time to time to those
who are missing the true intonation. As soon
as a pupil thinks he has his lesson perfectly
impressed on his memory, he goes up to the
master, makes a low bow, presents his book,
turns his back, and repeats what he has learnt.
This is what they call pey-chou, ** turning the
back on book,'' that is, saying a lesson.
The Chinese character is so large, and so
easy to distinguish, even at a great distance,
that this method does not appear superfluous, if
the point is to ascertain whether the pupil is
really repeating from memory. The bawling and
rocking themselves about is considered to lessen
the fatigue of study.
The first book that is placed in the hands
of scholars is a very ancient and popular work,
•entitled San-dze-king-, or Sacred Trimetrical
Book. The author has named it thus because
it is divided into little couplets, each verse of
which is composed of three characters or words.
The hundred and seventy-eight verses contained
in the San-dze-king form a kind of encyclopaedia,
in which children find a concise and admirable
summary of the chief branches of knowledge
that constitute Chinese science.
204 China's Business Methods.
It treats of the nature of man, of the various
modes of education, of the importance of the
social duties, of numbers and their origin, of the
three great powers, of the four seasons, of the
five cardinal points, of the five elements, of the
five constant virtues, of the six kinds of corn,
of the six classes of domestic animals, of the
seven dominant passions, of the eight notes of
music, of the nine degrees of relationship, of the
ten relative duties, of studies and academical
compositions, of general history and the succession
of dynasties, and the work concludes with
reflections and examples on the necessity and
importance of study in general. It may be
well imagined that a treatise of this kind, well
learnt by the pupils, and properly applied by
the master, must greatly develop the intellects
of Chinese children, and favor their natural
taste for the acquisition of serious and positive
knowledge. The San-dze-king is worthy in all
respects of the immense popularity it enjoys^
The author, a disciple of Confucius, commences
with a distich, the profound and traditional
sense of which is very striking, Jen-dze-tsou-sin-
pen-chan, ** Man in the beginning was of a
nature essentially holy." But it is probable that
the Chinese understand very little the tendency
and the consequences of the thought expressed
in these two lines.
Educational System. 205
After the trimetrical encyclopaedia the
Sze-chou^ or Four Classical Books, are placed
in the hands of the pupils. Of these, here is a
brief idea: The first is Ta-hio, or Grand Study:
a kind of treatise on politics and morals,
composed from the very concise text of
Confucius by one of his disciples; and the
grand principle inculcated in it is self-improve-
ment. These are the words of Confucius.
I.
"The law of the Grand Study, or practical
philosophy, consists in developing the luminous
principle of reason, which we have received
from Heaven, for the regeneration of man, and
in placing his final destiny in perfection, or the
sovereign good.
n.
''We must first know the goal towards
which we are tending, or our definitive destination.
This being known, we may afterwards maintain
the calmness and tranquility of our minds. The
mind being calm and tranquil, we may afterwards
enjoy that unalterable repose which nothing can
trouble. Having then attained to the enjoyment
of the unalterable repose which nothing can
trouble, we may afterwards meditate and form our
judgment on the essence of things: and having
formed our judgments of the essence of things,
we may then attain to the deiired perfection.
2o6 China's Business Methods.
III.
" The beings of nature have causes and
eflfects: human actions, principles and conse-
quences. To know causes and eflfects, principles
and consequences, is to approach very nearly
to the rational method by which perfection is
attained.
IV.
" The ancient princes who desired to develop-
in their states the luminous principles of reason
that we have received from Heaven, endeavoured
first to govern well their kingdoms: those who
desired to govern well their kingdoms,
endeavoured first to keep good order in their
families : those who desired to keep good order
in their families, endeavoured first to correct
themselves : those who desired to correct
themselves, endeavoured first to give uprightness
to their souls, endeavoured first to render their
intentions pure and sincere, endeavoured to
perfect as much as possible their moral know-
ledge, and examine thoroughly their principles
of action.
V.
"The principles of actions being thoroughly
examined the moral knowledge attains the highest
degree of perfection: the moral knowledge
having attained the highest degree of perfection^
the intentions are rendered pure and sincere :
'1
r r n.
UMVERSn
. OF
Educational System. ^^2fliJF0RN;^jr
the intentions being rendered pure and sincere^
the soul is penetrated with probity and
uprightness, and the mind is afterwards corrected
and improved, the family is afterwards better
managed: the family being better managed, the
kingdom is afterwards well governed : and the
kingdom being well governed, the world enjoys
harmony and peace.
VI.
"All men, the most elevated in rank as
well as the most humble and obscure, are
equally bound to perform their duty. The
correction and amelioration of one's self, or
self-improvement, is the basis of all progress,
and of all moral development.
VII.
** It is not in the nature of things but that
whatever has its basis in disorder and confusion^
should also have what necessarily results from
that. To treat lightly what is the principal or
most important thing, and seriously what is
secondary, that is a method of action we ought
never to follow."
As before stated, the Book of the Grand
Study is composed of the preceding text, with
a commentary in ten chapters by a disciple of
Confucius. The commentator exerts himself
especially to apply the doctrine of his master to
political government, which Confucius defines as
2o8 China^s Business Methods.
what is just and right, and which he supposes
founded on the consent of the people. The
formula in the Grand Study is as follows : —
"Obtain the aflfection of the people, and
thou wilt obtain the empire: Lose the aflfection
of the people, and thou wilt lose the empire ! "
The Book of the Grand Study concludes
in these words: —
**If those who govern states only think of
amassing riches for their personal use, they will
infallibly attract towards them depraved men:
these depraved men will make the sovereign
believe that they are good and virtuous: and
these depraved men will govern the kingdom.
But the administration of these unworthy
ministers will call down the chastisement of
Heaven, and excite the vengeance of the people.
When matters have reached this point, what
ministers, were they ever so good and virtuous,
could avert misfortune? Therefore, those who
govern kingdoms ought never to make their
private fortune out of the public revenues:
but their only riches should be justice and
equity."
The second classical book, Tchoung-young^
or the Invariable Centre, is a treatise on the
conduct of wise men in life. It has been edited
by a disciple of Confucius, according to
instructions received from the lips of the master
Educational System. 209
himself. The system of morals contained in
this book is based on the principle that virtue
is always at an equal distance from two
extremes. This harmonious centre is the source
of the true, the beautiful, and the good.
I.
''The disciple Sze-lou inquires of his master
concerning the strength of man.
II.
" Confucius replies : * Is it concerning manly
strength in northern or southern countries that
you wish to inquire? Is it of your own
strength ? '
HI.
"To have gentle and benevolent manners
for the instruction of men — to have compassion
towards those madmen who revolt against
reason, — this is the manly strength proper to
southern countries: it is that which the wise
endeavor to attain.
IV.
"To make one's couch on steel blades and
skins of wild beasts, — to contemplate without
shuddering the approach of death — this is the
manly strength proper to northern countries, and
it is that which the brave endeavor to attain.
V.
"But much stronger and much grander is
the powder of soul belonging to the sage who
14
itio China's Business Methods.
lives always at peace with men, and who does
not allow himself to be corrupted by passion.
Much stronger and grander is the power of
soul in him who keeps always in the straight
path, equally distant from two extremes. Much
stronger and grander is the power of soul in
him who, when his country is in the enjoyment
of a good government, which is his work, does
not allow himself to be corrupted or blinded
by a foolish pride. Much stronger and grander
is the power of the soul in him who, when
his country, being lawless, has not a good
government, remains immovable in his virtue
till death."
Confucius, in his Invariable Centre, as
in his other treatises, endeavors to apply his
-ethical principles to politics. These are the
conditions on which he allows to sovereigns the
right of governing nations and giving them
institutions : —
I.
*'It is only the man supremely holy, who,
by the faculty of knowing thoroughly, and
comprehending perfectly, the primitive laws of
living beings, is worthy of possessing supreme
authority and commanding men, — who, by
possessing a soul, grand, firm, constant, and
imperturble, is capable of making justice and
equity reign, who, by his faculty of being always
Educational System. 411
honest, simple, upright, grave and just, is
capable of attracting respect and veneration,—
who, by his faculty of being clothed with the
ornaments of the mind and the. talents procured
by assiduous study, and by the enlightenment
that is given by an exact investigation of the
most hidden things and the most subtle
principles, — ^is capable of discerning with accuracy
the true from the false, and good from evil.
II.
" His faculties are so ample, so vast, so
profound, that he is like an immense spring,
whence all issues in due season.
III.
''They are vast and extensive as the
heavens ; the hidden source whence they flow
is deep as the abyss. Let this man supremely
holy appear with his virtue and his powerful
faculties, and the nation will not fail to have
faith in his words. Let him act, and the nation
will not fail to be in joy.
IV.
"It is thus that the renown of his virtues
will be like an ocean, inundating the empire
in every part. It will extend even to the
barbarians of the north and south. Wherever
vessels or chariots can reach — wherever the
power of human industry can penetrate, — in all
the places which the heavens cover with their
212 China's Business Methods.
immense canopy, — on all points that the earth
contains, which the sun and the moon enlighten
with their rays, — which the dew and the clouds
of morning fertilize, — all human beings who live
and breathe can never fail to love and to
revere him."
The third classical book, Lun-yu^ or
Philosophical Conversations, is a collection of
maxims put together in rather a confused
manner, and of recollections of the discourses
of Confucius with his disciples. Among a great
number of common-places on morals and
politics, are some profound thoughts, and some
curious details concerning the character and
manners of Confucius, who seems to have been
something of an original. Thus the Lung-yu
informs us that the master, in introducing his
guests, kept his arras stretched out like the
wings of a bird; that he would never eat
meat that was not cut in a straight line; that
if the mat on which he was to sit down
was not regularly placed, he would not take
it ; that he would point to nothing with his
fingers, etc.
Finally, the fourth classical book is that of
Meng-tze, or Mencius, as he is called by
Westerners. This work, divided into two parts,
contains the summary of the counsel addressed
by that celebrated philosopher to the princes
Educational System. 213
of his time and his disciples. Mencius has been
decorated by his countrymen with the title of
Second Sage, Confucius being the first; and
they render to him, in the great Hall of the
Learned, the same honors as to Confucius. This
is what a Chinese author says of the Book of
Mencius: — *'The subjects treated in this work
are of various natures. In one part are examined
the virtues of individual life and of domestic
relations; in another the order of affairs. Here
are investigated the duties of superiors, from
the sovereign to the lowest magistrate, for the
attainment of good government. There the
toils of students, laborers, artisans, and traders,
are exhibited ; and in the course of the work
the laws of the physical world, of the heavens
and the earth, the mountains and rivers, of birds,
quadrupeds, fish, insects, plants and trees, are
occasionally described. ^A great number of
affairs that Mencius managed, in the course of
his life, in the intercourse of his life, in his
intercourse with men, his occasional discourses
with people of rank, his instructions to his
pupils, his explanations of books, ancient and
modern, — all these things are incorporated in
this publication.
** It is a collection of historical facts and
of the words of ancient sages, uttered for the
instruction of mankind.''
^14 China! s Business Methods.
M. Abel Remusat has thus characterized the*
two most celebrated philosophers of China : —
"The style of Meng-tze, less elevated and
l^ss concise than that of the Prince of Letters/
Confucius, is more flowery and elegant, and
also not deficient in nobleness. The form of
dialogue, which he has preserved in his
philosophical conversations with the great
persons of his time allows of more variety than
one can expect to find in the apothegms and
maxims of Confucius. The character of their
philosophy also differs widely. Confucius is
always grave, even austere. He extols the
virtuous, of whom he draws an ideal portrait^
and only speaks of the vicious with cold
indignation. Meng-tze, with the same love of
virtue, seems to have more contempt for, than
hatred of, vice. He attacks by the force of
reason, and does not disdain even to employ
the weapon of ridicule. His manner of arguing
approaches the irony attributed to Socrates.
He does not contend with his adversaries, but
endeavors, while granting their premises, to
draw from them absurd consequences, that he
may cover them with confusion. He does not
even spare the princes and great men of his
time, who often only feigned to consult him,
in order to have an opportunity of boasting of
their conduct, or to obtain from him eulogiums
Educational System. 315
that they supposed themselves to merit*
Nothing can be more piquant than the answers
he sometimes gives them on such occasions^
and nothing more opposed to the too generally
entertained opinion of the baseness and servility
of Orientals, and especially of the Chinese.
** Meng-tze does not resemble Aristippus
so much as Diogenes, but without violating
decency and decorum. His liveliness does
sometimes appear of a rather . too tart a
quality, but he is always inspired by zeal for
the public good.
"The pupils in Chinese schools learn these
books at first by heart, without troubling
themselves with the sense or meaning of the
author : and if they attach any ideas to his
words they are indebted merely to their own
sagacity. It is only when they are capable of
repeating the whole, from one end to the other^
that the master sets to work, with the assistance
of innumerable commentaries, to develop the
text, word by word, and give the necessary
explanations : and the philosophical opinions of
Confucius and Meng-tze are then expounded, in
a manner more or less superficial, according ta
the age and sagacity of the pupil."
After the four classical books, the Chinese
study the five sacred books, King^ which are
the most ancient monuments of Chinese
ai6 China's Business Methods,
literature, and contain the fundamental principles
of the earliest creeds and customs. The first
in date, the most renowned, but the least
intelligible of these sacred books is the Book
of Changes, Y-King. This is a treatise on
divination, founded on the combinations of
sixty-four lines (some entire, others broken) and
called koua^ the discovery of which is
attributed to Fou-hi, the founder of Chinese
civilization. Fou-hi is said to have found these
mysterious lines, which he says are capable of
explaining all things, on the shell of a tortoise.
But Confucius, whose capacity and talents
were so extraordinary, studied these enigmatical
Jioua very assiduously and went through much
labor in editing the Y-King^ without being able
to throw much light upon the matter. After
Confucius, the number of writers who have had
the weakness to occupy themselves seriously
with the Y'King^ is ahnost incredable. The
Imperial Catalogue enumerates more than 1,450
treatises, in the form of memoirs, or commentaries,
upon this famous but whimsical work.
The Chou'king^ or Book of History, is the
second sacred book. Confucius has collected
in this important work the historical recollections
of the first dynasties of China as far as the
eighth century before our era. It contains the
speeches addressed by several emperors of these
Educational System. 217
dynasties to their great officers, and furnishes a
great number of precious documents concerning
the first ages of the Chinese nation.
The third sacred book is the She-king^ or
Book of Verses; a collection, made also by
Confucius, of ancient national and official songs,
from the eighteenth to the third century before
our era ; and there is found in it very interesting
and authentic information on the ancient
manners of China. The Book of Verses is
often quoted and commented on in the
philosophical writings of Meng-tze and of
Confucius, who recommends it to his disciples.
He says, in the Lun-yu^ ** My dear disciples,
why do you not study the Book of Verses ?
The Book of Verses is proper for elevating
your sentiments and ideas; it is fitted for
forming your judgment by the contemplation
of things; it is good for uniting men in mutual
harmony, and for exciting regret without
resentment."
The fourth sacred book is the Li-kt^ or
Book of Rites. The original was lost in the
conflagration of ancient books ordered by the
Emperor Thsin-che Hoang, at the end of the
third century before our era. The present
ritual is a collection of fragments ; the most
ancient of which do not appear to date froiu
an earlier epoch than that of Confucius.
2iS China's Business Methods.
Finally, the fifth sacred book is the
Tchun-thsiou^ or the Book of Spring and
Autumn, written by Confucius, and which takes
its name from the two seasons of the year in
which it was commenced and finished. It
contains the annals of the little kingdom of
Lou, the native country of this philosopher,,
from the year 292 to 480 before our era.
Confucius wrote it to recall the princes of his
time to respect for ancient customs, by pointing
out the misfortunes that had happened to their
predecessors since these customs had fallen into
disuetude.
These five sacred and four classical books
are the basis of all science among the Chinese.
What one finds in them is, it must be confessed,
but little suited to the taste or wants of
Westerners. It would be vain to seek in them
for scientific ideas; and, with some truths of
great importance in politics and morals, one is
confounded by finding mingled the grossest
errors and the most absurd fables. Chinese
instruction, nevertheless, taken on the whole,,
tends wonderfully to create in the mind an
attachment to ancient customs, and a profound
respect for authority ; two things which have
always been the twin pillars of Chinese society,,
and which alone can serve to explain the
duration of their ancient civilization.
Extra-territoriality. 219
EXTRA-TERRITORIALITY.
It is the general doctrine of internationar
law that, by virtue of its territorial sovereignty y.
a state possesses jurisdiction over the person
and property of foreigners found upon its land
and waters, and that it is responsible for acts
done within its boundaries by which foreign
states or their citizens are affected. But, in
the treaties with Western nations, China
has surrendered the doctrine which gives a
sovereign state jurisdiction over the person
and property of foreigners within its.
territorial limits, although admitting herself still
responsible for whatever affects such person
and property.
This right, which international law recog-
nises as belonging to a sovereign state, China
has surrendered in the treaties, and as a conse-
quence the person of foreigners, and the property
owned by foreigners, upon the land and
waters of China, are exempt from the operation
of Chinese laws and are as much under the
jurisdiction of their respective nations as if not
in China.
^20 China's Business Methods.
To make plain the subject of this paper
I will select the city of Shanghai, which is
situated in the Empire of China, and briefly
point out the main principles of its government,
and if the reader will follow me I believe
he will readily understand what is meant by
-extra-territoriality.
The city of Shanghai is about twelve
miles from the mouth of the Whangpoo River,
and when Shanghai was made an open port
China agreed that certain territory bordering
the river and contiguous should be set apart
for foreign business and for the residence of
foreigners, and under the agreement the
government of France laid oflF a settlement,
which is under the municipal control of that
government, while some of the other Western
nations acted in concert and have a settlement
known as the International Settlement. But
foreigners going to Shanghai to live or to carry-
on business are privileged to reside on either
settlement, and the International Settlement
is not under the exclusive municipal control of
any particular government, as the French.
As indicated, there is a Municipal Council
and a municipal police for each of the
settlements named, and the former is elected
by the qualified voters thereof. There are
regulations peculiar also to each settlement
Extra-territoriality. 221
providing the qualification for a member of the
Municipal Council as well as the qualification
of a voter, and further providing how property
in a settlement shall be assessed, the ratio of
taxation, and how taxes shall be collected. As
a further provision against the exercise of too*
wide a discretion by a Municipal Council the
fiscal budget must be annually submitted to the
tax-payers in general meeting for approval, and
no expenditure is legal without such approval.
Thus it is seen that a foreigner, residing on
either of the settlements at Shanghai, has his
property wholly exempt from any fiscal regulation
of the government of China, except a very
small land-tax, and that whatever burdens in
the nature of taxes may be imposed, is imposed
by and with his consent and under regulations,
which have his approval. The Chinese
Government has practically no part whatever in
the imposition or the collection of taxes on
foreign owned property within the limits of tha
settlements at Shanghai, or any other open
port of the Empire.
And the police forces of the settlements- ^
are also free from the control or interference
of the Chinese authorities. Each settlement has.
its own police force which is appointed by and
is under the direction of the Municipal Council /
of such settlement. The Chinese government
222 China's Business Methods.
has no authority whatever to make an arrest
in the settlement, and this is true whether the
offender be a subject of the Emperor of China
or a foreigner.
But the Consular Body is superior in
authority to the Municipal Council and is
composed of the consular representatives of
foreign nations at Shanghai. In fact, the
authority with which each consular representative
is invested by the treaties is the origin and
foundation of extra-territoriality as applied to
China, and, in order that this division of the
subject may be better understood, the authority
of one consular representative will be examined,
as each has about the same authority.
No American citizen at the port of Shanghai
can be arrested and tried or convicted for any
offense except by and through the action of
the Consul-General of the United States of
America. Whether an American citizen commits
a criminal offense, or is amenable to a civil
process, there is no officer of China or of any
other nationality in China that has jurisdiction^
except the Consul-General of the United States,
and the only warrant or summon such American
citizen is compelled to obey must have the
signature of the Consul-General of the United
States, and should be executed by the United
States Marshal. The Court of the Consul-
Extra-territoriality . » 223
General is a United States Court, and, although
fitting in the Empire of China, has the
jurisdiction and possesses the same power over
American citizens in China as a United States
Court would have sitting in any city of the
United States.
That the person and property of a foreigner
may be secure under the jurisdiction of
his consular or diplomatic representative, the
regulations by which a Municipal Council shall
te guided must have the approval of such
consular and diplomatic representative before
becoming effective.
The settlements are further protected from
the authority of China to the extent that, if
China should wish to arrest one of her own
subjects residing in a settlement, such subject
could not be arrested until the warrant for
the arrest had been presented to the senior
consular representative and countersigned by
him. But if the Chinese thus sought to be
arrested was in the employment of a foreigner
the warrant would, in that case, have to be
presented to the consular representative of such
foreigner and approved by him and then counter-
signed by the senior consular representative.
And after China had conformed to the above
requirements, the arrested Chinese would still
have the accusation against him heard and
224 Chinas Business Methods.
passed upon under the supervision of a foreign
consular officer in a tribunal known as the
Mixed Court.
There is a Mixed Court for each of the
two Settlements with original and exclusive, and^
in some cases, final jurisdiction. In the French
Settlement the Mixed Court is presided over
by a Chinese Magistrate and an oflScer from the
Consulate-General of France, and no officer
from any other foreign Consulate -General is
permitted, except by the courtesy of the
Consul-General of France, to sit in that Courts
But the Mixed Court that holds its session in
the International Settlement, while presided over
by a Chinese Magistrate, the foreign consular
officer who also presides is not restricted to-
any one Consulate-General. Generally the
foreign consular officers who preside with the
Chinese Magistrate in the Mixed Court of the
International Settlement are from the Consulates-^
General of Great Britain, Germany and the
United States, and these three officers have
an understanding as to the day when one or
the other shall preside. There is, however, this
exception: — should a case be before the Mixed»
Court on the day when the British or German-
officer presided, and which involved the interest
of a citizen of the United States, such a caser
would be continued in order that the officer
Extra 'territoriality. 225
from the Consulate-General of the United
States might preside, and vice versA. The
Mixed Court is in session every day, except
Sunday, the morning session being mostly
devoted to the disposal of police cases, and the
afternoon session to the trial of civil cases.
As the French and International Settlements
adjoin, it was necessary to have rules defining
the extent of the jurisdiction of the two Mixed
Courts, and such rules were framed by the
Consular Body, with the approval of the
Diplomatic Body in Peking, and are as
follows : —
1. "In all civil cases between Chinese the
plaintiff will follow the defendant, and will sue
him before the Mixed Court of his, the
defendant's, residence.
2. **In all criminal cases where foreigners
are not concerned and in all police cases
against Chinese residents in the Settlements, the
Mixed Court of the Settlement in which the
crime or contravention has been committed is
alone competent.
3. *'In mixed civil cases: —
(a) *4f the plaintiff is a foreigner, not of
French nationality, and the Chinese defendant
is a resident of the International Settlement,
he is to be sued before the Mixed Court of
the International Settlement.
16
niG China's Business Methods.
(3) "If the plaintiflF is French and - the
Chinese defendant is a resident of the French
Settlement he is to be sued before the Mixed
Court of the French Settlement.
(c) "If the plaintiff is a foreigner, not of
French nationality, and the Chinese defendant
is a resident of the French Settlement the latter
shall be sued before the Mixed Court of the
International Settlement, whose warrant or
summons for his appearance, after countersignature
by the French Consul-General, will be executed
or served by the runners of the International
Mixed Court with the assistance of the police
of the French Settlement, without previous
hearing in the Mixed Court of the French
Settlement.
{d) "If the plaintiff is French and the
Chinese defendant is a resident of the Inter-
national Settlement the latter shall be sued
before the Mixed Court of the French Settlement,
whose warrant or summons for his appearance,
after countersignature by the Senior Consul,
will be executed or served by the runners of
the French Mixed Court with the assistance of
the police of the International Settlement,
without previous hearing in the Mixed Court
of the International Settlement.
4. "In criminal cases where a foreigner,
not of French nationality, is complainant, the
Extra4erritoriality. i27
Mixed Court of the International Settlement is
competent; if a Frenchman is the complainant,
the Mixed Court of the French Settlement is
competent/'
If the foreigner, against whom a warrant or
•summons has been issued, has no consular
representative, such warrant or summons,
before it can be legally executed, should
be countersigned by the senior consular
representative, and then the foreigner will be
brought before the Mixed Court, as defined
by the rules above, for trial. If the foreigner
resides in the French Settlement it would be
necessary to have the warrant approved by the
Consul-General for France.
Foreigners residing in the interior of China,
•such as missionaries, and outside of the limits
of settlements at the open ports, are not
therefore subject to the jurisdiction of China.
When foreigners so residing violate the laws of
China they may be apprehended and brought
before their nearest consular representatives,
but the usual rule is for the oflFense to be
brought to the attention of the consular
representative of the foreigner, who will take
such action as the circumstances of the case
demand.
Foreign owned property is as secure at the
open ports of China as anywhere in the world,
228 China's Business Methods.
and there is no city under a more efficient
municipal government than the city of Shanghai.
At all the open ports, where there is a
municipal government with foreigners in control,
there is the same security for life and property
as there is in the best governed cities of
Western Nations.
Note. — The following provision from the treaty between Great
Britain and China is known as the Extra-territoriality Clause, and
appears as a part of Section 2 of the Chefoo Convention : —
The British Treaty of 1858, Article XVI, lays down that
** Chinese subjects who may be guilty of any criminal act towards
British subjects shall be arrested and punished by Chinese authorities
according to the law^s of China.
"British subjects who may commit any crime in China shall
be tried and punished by the Consul, or any other public functionary
authorised thereto, according to the laws of Great Britain.
"Justice shall be equitably and impartially administered oa
both sides."
The words "functionary authorised thereto" are translated in
the Chinese text "British Government."
" In order to the fulfilment of its Treaty obligation, the British
Government has established a Supreme Court at Shanghai, with a
special code of rules, which it is now about to revise. The Chinese
Government has established at Shanghai a Mixed Court ; but the
officer presiding over it, either from lack of power or dread of
unpopularity, constantly fails to enforce his judgments.
"It is now understood that the Tsung-li Yamen will write
a circular to the Legation, inviting Foreign Representatives at
once to consider with the Tsung-li Yamen the measures needed
for the more effective administration of justice at the ports opea
to trade.
"It is agreed that, whenever a crime is committed affecting
ihe person or property of a British subject, whether in the interior
Exira'territortality. 229
or at the open ports, the British Minister shall be free to send
officers to the spot to be present at the investigation.
" To the prevention of misunderstanding on this point. Sir Thomas
Wade will write a note to the above effect, to which the Tsung-li
Yamen will reply, affirming that this is the course of proceeding to
be adhered to for the time to come.
"It is further understood that so long as the laws of the two
countries differ from each other, there can be but one principle to
guide judicial proceedings in mixed cases in China, namely, that the
case is tried by the official of the defendant's nationality ; the official
of the plaintiff's nationality merely attending to watch the proceedings
in the interest of justice. If the officer so attending be dissatisfied
with the proceedings, it will be in his power to protest against
them in detail. The law administered will be the law of the
nationality of the officer trying the case. This is the meaning
of the words hui t^ung^ indicating combined action in judicial
proceedings, in Article XVI of the Treaty of Tientsin ; and this
is the course to be respectively followed bv the officers of either
nationality."
a^o China's Business Methods.
STRATEGICAL POSITIONS.
When Warren Hastings was the representa-
tive of British interest in India he sent a
mission to the Teshu Lama and arranged for
a trade route between Bengal and Thibet.
This was in 1774, but Hastings was recalled
from India and his plan continues in abeyance.
In 1885 it appeared that the British
Government was about to recognize the foresight
of Hastings by organizing a mission to be sent
to Lhassa for the purpose of opening trade
routes between India and Thibet, but when
the mission was within a few days' journey of
the Thibetan capital it was ordered to return.
An intimation from China that the object
of the mission would be considered unfriendly^
if it proceeded to the Capital of Thibet, caused
the order for its return. At that time Great
Britain was impressed with the greatness of
the Chinese Empire and was not disposed to
arouse latent energies which were believed to
be immeasurable in resources and strength, and
thus the opportunity was again thrown away.
Strategical Positions. ^ 231
Not only have recent developments proved
the weakness of China, but they have
demonstrated the foresight of Hastings, for, had
his plans been matured, Russia would not now
be in Manchuria and Mongolia and hovering
over India in the threat to occupy Thibet.
With Thibet thrown open to settlement
from India, a railway would place Calcutta
within three days travel of the Thibetan plateau,
which would solve the sanitary problem of
India, and British soldiers, stationed along the
foothills of the Himalayas, would be forever
exempt from the deadly pestilence of India.
It has been a century since the cruelty
and rapacity of Hastings were themes for the
invectives of the orator, but, whatever his
faults, the comprehensive grasp of his statesman-
ship is conceded by the verdict of history.
Hastings administered in India under
circumstances that were not accurately under-
stood by many who judged him, and what
appeared as cruel and rapacious may have been
extenuated by a better knowledge of their
be^iring upon the preservation of human life
and the advancement of civilization. The
Sirdar is censured for exhuming the body of
the Mahdi, burning it and scattering the ashes
to the winds and w^aters, but if the act quiets
the superstitipus fervor of the Mahdi's fpllowws
232 China's Business Methods.
and causes them to follow peaceful pursuits, its
apparent vandalism will find extenuation in its
necessity.
The importance of Thibet in commercial
strategy bears upon both India and China. It
is the heart of Asia and the roof, as it were,
of the world, forming the nucleus of the Asiatic
continent and from which depend the lower
lying countries of India, Burmah, Siam, Cochin
China on the South, China proper on the East,
and the Tarin Basin with East Turkestan on
the North. Higher above the sea than the
countries named, the rivers that water them all
have their sources in the Thibetan plateau.
There are the Indus, the Ganges, and the
Bramaputra, all flowing through India and
debouching into the Indian Ocean on the South,
with the Irrawaddy and the Salween flowing
through Burmah into the Bay of Bengal. The
Mekong crosses Upper Siam and Cochin China,
and taking a south-west course, flows into the
China Sea near Saigon, and the Red River of
Tonkin rises in the Chinese province of
Yunnan, which is itself a high tableland and
peninsular extension of the Thibetan plateau.
It is thus seen that an enterprising
commercial nation in possession of Thibet would
command the sources of the great rivers that
water the plains of Asia and could follow
Strategical Positions.
these mile marks which point the way of
Asiatic commerce to the sea. It would be a
strategical position from which the military and
•commercial movements of all Asia could be
watched, and should be occupied, if occupied
at all, by the Anglo-Saxon race.
With special reference to the subject under
consideration, two of the great rivers of China
have their sources in Thibet, and, after running
right athwart of eighteen Chinese Provinces
from East to West, end their way into the
Pacific Ocean. One of these rivers, the
Yangtsze, is the longest in the eastern half of
the globe and drains nearly a million square
miles of territory and is 3,200 miles in length,
while the other, the Hwangho, measures about
2,600 miles in length and drains nearly three-
quarters of a million square miles. From the
western side of Thibet both of these rivers
could be commanded in addition to the trade
routes that cross the eastern plains of China.
There is no position that would give
greater commercial strength in China than the
control of the navigation of the Yangtsze
River. It would give the nation that had
such control the influence in the commerce of
China that the control of the Mississipi bears
(to the internal commerce of North America,
and to fully appreciate the importance and
234 Chind's Business Methods.
value of the Yangtsze Valley one has only to*
remember^ in comparison, the importance and
value of the Mississipi valley, each representing
the heart of a continent, as does the valley
of the Amazon.
It is estimated that the Yangtsze Valley
comprises an area of 600,000 square miles and
a population of 180,000,000. The interport
trade of the Yangtsze River is valued at
$150,000,000, and if the natural resources of
the provinces through which it flows were
developed, and improved means of communication
introduced, it could probably be soon valued
at $300,000,000.
Had the plan of Warren Hastings been
adopted and vigorously executed by the British
Government, the province of Szechuen, the
wealthiest and most fertile of all the Chinese
provinces, would long since have been under
the influence of the Saxon merchant, and the
Yangtsze Valley would not be debatable as a
sphere of influence. That merchant would have
entered China across the Thibetan border and
descended the Yangtsze before the Russian and
French could have disputed his progress at
Hankow, or stopped it by the railroad from Hankow
to Peking, which is under Russian influetice.
Now the Saxon merchant is ascending the
Yangtsze, but the situation has materially^;
Strategical Positians. 235
changed, and combinations against him are
probable and effective which in earlier times
were not possible.
In Southern China the Si-Kiang, or West
River, is the principal waterway of commerce.
It rises in North-east Yunnan, and, flowing
through Kueichou, Kwangsi and Kwangtung,,
passes the city of Canton and enters the sea
by Hongkong. Although this important medium
of commerce is navigable for steamers 300
miles from its mouth, it was not until June
1897 that steamers were allowed to ascend
beyond Canton. At that date Wo-chow was
declared a Treaty Port, and then the 218 miles
between Canton and Wo-chow were opened to-
steam navigation.
The West River has several branches which
are navigable by small boats and which pass
some of the inland cities of considerable
commercial importance. This river and its
tributaries are the commerical outlets of
Southern China, and could be made more
useful as means for conveying merchandise by
attention and expenditure in the removal of
obstructions.
The provinces watered by the West River
are not so fertile as those which border the
Yangtsze, nor arc they $0 densely populated,,
but some are contiguous to the most fertile lands
536 China's Business Methods.
of China, and to command the trade of Southern
•China the control of its principal waterways
would be essentially strategical.
Having named the two principal rivers for
•entering commercial China from the seaboard,
and directed attention to Thibet as a land base
for a similar entrance to the more northern
provinces, one has only to examine the map to
^ee that Burmah is also a land gate to China.
When Upper Burmah was annexed to Great
Britain the barrier to the Saxon's approach to
•China from his Indian province was removed,
and the north-eastern frontier of the province
was placed co-terminous with China, and should
make probable a connection between Burmah's
great river, the Irrawaddy, and the Yangtsze,
the great river of China.
The connection of the Irrawaddy and the
Yangtsze by railway would prove the effective
-agency in the civilization of the Chinese Empire.
One has only to mark on the map a line from
the navigable source of the Irrawaddy through
the provinces of Yunnan and Szechuen until it
reaches the Yangtsze, and no other statement
will be necessary to evidence the commercial and
political strength of such a position. The nation
that occupied and controlled it would direct the
future policy of China and regulate the markets
of the Empire.
Strategical Positions. lyj
But France, supported by Russia, now
stands in the way of the execution of this
comprehensive plan. The Saxon has neglected to
utilize the opportunity of Thibet as a land base
and may have delayed too long to utilize that
of Burmah.
If China is to be divided between Western
Powers, or spheres of influence defined, the
map of the Empire may be changed, but the
commercial waterways must remain as now».
Western chancelleries cannot change, by
diplomatic decrees, the course of the great
rivers of China, and these will ever give the
advantage to the nation which controls their
navigation. Soon the now almost unknown land
of Thibet will be under the influence of either
the Russian or British Government, and the
foreign influence that governs Thibet will not
be long in entering China and proving paramount
in the province of Szechuen.
If Great Britain should claim the Yangtsze
Valley and enforce such claim, China's policy
would be more amenable to British counsel, and
the nearness of Hongkong to the West River
ought to give to Great Britain the advantage
in deciding what nation should control its.
navigation.
Notwithstanding all Europe appears desirous^
of sharing in the division of China, the situation
la^S China's Business Methods.
is still favourable to Great Britain, and if the
United States should care to have an interest
in this real estate business, and the British and
the American governments co-operate, the future
of China would be directed by the Anglo-
American race.
It is easier to point out mistakes than to
avoid them, but it would have been more of a
center shot, in the interest of American
commerce in Asiatic lands and seas, had the
United States secured from China a suitable
port for a naval base and thus become
entrenched on the mainland of Asia.
The influence that goes out from the
Philippine Islands ought to be beneficial, though
indirect, in promoting American commerce in
China, but it will be materially neutralized if
China is to be divided between European
powers. The British branch of the Saxon race
cannot be expected to successfully undertake
the civilization of India and China, and in the
interests of the Saxon race the American branch
might well have assisted in providing a better
government for China, both branches having
more largely shared the foreign trade of the
Empire.
At this time, when the oldest and greatest
Empire of Asia turns to the Anglo-Saxon race
for advice and aid, it is fortunate for civilization
Strategical Positions. 239
that the two branches of that race are tacitly
•co-operating to wake up Chiiia and imbue her
with a new life and destiny.
Those who oppose American expansion
forget that no barrier can be erected which
Saxon energy will not overleap, and, destined
to fill every land and sea with its busy
industry, it should move in concert, for of the
1,500,000,000 inhabitants of the earth there are
only 100,000,000 Saxons.
240 Chinas Business Methods.
CONSULS AND A CONSULAR SYSTEM.
About the twelfth century consuls were
appointed in the opulent States of Italy, and
their origin has been ascribed to the necessity
for extraordinary assistance in those branches
of commerce formerly carried on with
barbarous aAd uncivilized nations. But now,
in every part of the w^orld where navigation
and commerce have penetrated, the utility of
such mercantile officers have been recognized
as necessary agents in the development and
protection of trade, and their duties and
privileges are generally limited and defined in
treaties of commerce, or by the statute
regulations of the country -which they represent.
The consular system was therefore organized
to promote the commerce of the country
represented by the consul and as a source of
information for its business men.
The members are accredited by their
governments to other governments for the
purpose of studying the nature and movement
of trade, in order that the home merchant may
Consuls and a Consular System. 241
be kept informed with the view of making
his calculations and ventures accordingly ; and
unless the system is organized on business
principles, and the members selected on account
of their peculiar fitness, the organization will
prove imperfect and fail in its object.
Every nation of any commercial importance,
except the United States of America, has a
permanent consular system, by virtue of which
the consul is trained for his special duties and
holds his position, as a rule, during good
behavior and usefulness.
But since the system was first organized in
the United States its members have been almost
invariably appointed for political and not
commercial reasons, until it has become a great
political camp, spreading over the world, where
the favorites of the dominant party are stationed
at fixed salaries and certain fees. Occasionally,
even under such a system, men of competency
and qualification are selected, and their industry
and reports prove what the system could be
made if properly organized, as well as the
potency of such an agency in the expansion of
commerce, if the business element, in lieu of
the political, predominated.
But it is simple justice to write, that
although the system of the United States con-
sular service is more political than commercial,
16
242 China! 5 Busimss Methods.
the reports of the consuls of that government
favorably compare with the reports of the
consular oflScers of any other government, but
this fact is again proof of the superior and
more intelligent information that could be placed
before the American merchant, if the tenure of
his consular representative was of the permanent
nature to enable the consul to acquire the
experience which is the necessary result of
such a tenure. I am writing specially of the
consular system of the United States because
I have had some experience as a member
of it.
But the tenure of a consular oflScer of
the United States will never become permanent,
except through the influence of the business
man, as distinguished from the politician, and
if the chambers of commerce were to exert
their influence with positive and persistent
directness, the desired permanency would follow
at a much earlier date. There is no one class
of business men more interested in perfecting
the consular system of the United States than
the exporting and importing merchant, but the
subject appeals to all interested in the foreign
and domestic commerce of America, for both
branches are so inter-dependent that an advan-
tage accruing to the one is an advantage
gained by the other.
Consuls and a Consular System. 243
It would be an unusual accomplishment if,
during a four years' term of office in a foreign
country, a consul succeeded in acquiring a
reasonable knowledge of its language and of
the inhabitants, for all these must be learned
before he can be fully competent to transmit
intelligent information to his home merchants*
The domestic habits of a people furnish the
key to their commercial habits, and it is difficult
to possess a requisite knowledge of either
without being able to enter into and understand
the language which is the medium or vehicle
of their daily business transactions.
The British Government recognize the
importance of such an intimate acquaintance,
and there is not a British consul in China
who does not speak the Chinese language,
conversing with Chinese officials in their own
tongue, while there is not, and I do not
remember there ever was, a consul of the
United States in China who could speak the
Chinese language. There may have been a
missionary or so temporarily acting as consul,
but the rule applies and is not modified by
the exception.
There are always a number of young men
connected with the British consular service in
China known as student interpreters, and they
are being trained for the service of their
\
344 Chinds Business Methods.
government and are gradually promoted to
consulships. They enter the service while
young, and while studying the language
become familar with consular details, and in
that way are prepared when they receive their
promotion.
There is no similar preparation known to
the consular service of the United States.
True, there are about fifteen consular clerks
whose tenures are permanent, but generally not
one remains in an eastern country long enough
to learn its language.
In the reorganization of the system too
much importance cannot be given to the
preparation of young men for consular service
in China. There should be at the legation of
the United States at Peking several young
men whose prescribed duty it was to learn the
Chinese language and the commercial system of
China, and to have their proficiency tested by
stated examinations. A young man, for the
purpose indicated, ought to be sent to every
consulate in China, and all encouraged by the
knowledge that their eflforts and eflSciency would
receive the recognition of their government.
The adoption and close adherence to such a
policy would be so apparent in good results
in a few years as to justify the necessary
expense for its inauguration.
Consuls and a Consular System. 245
I have restricted the application of the
policy to China, because the needs of the
service in that Empire have come more under
my immediate observation, but the principle
should be applied to all countries to which the
United States have appointed consuls.
The consul should, of course, be carefully
examined before commissioned. His capacity to
speak and write correctly the language of his
own country should be fairly tested, and no
doubt must remain of his knowledge of the
elementary principles of that language, but in
the United States not even proof of this
primary and essential requisite is demanded
by the appointing power, and a consul is often
commissioned in the absence of any such tested
evidence of his capacity; it is not known
whether he possesses the merest elementary
knowledge of the business history of his own
country, but nevertheless he is commissioned
to a foreign government to advise the
merchant on the most important commercial
subjects, and, in addition, then denied the
opportunity of sufficient time for study to
inform himself.
The scope of an examination should embrace
a sound rudimentary knowledge of history and
political economy. The candidate should be
proficient in arithmetic, geography and grammar,
246 China's Business Methods.
but any bright school boy might be more
proficient and yet make an indiflFerent consul.
What is needed is not the ability to promptly
answer technical questions, but the capacity to
grasp a principle and its logical consequences.
The best of bookkeepers would probably wreck
a business house in twelve months while the
mind that lays the foundation of business success
would soon make a ledger incomprehensible.
A consul should also be familiar with the history
of commerce, the routes of trade, the laws which
govern trade, and not a mere parrot without
originality or thought. The head of any branch
of the public service, to be a succe«sful head,
must have the talent to comprehend and apply
principles, for without that talent there would
be no guiding mind to hold into place and
to direct the movement of the machinery. The
principles which control trade must be mastered,
and the character of markets, the probable
demand, the amount of capital usually employed
in importations, and especially the facilities and
costs for handling freight, and when the consul
familiarises himself with these general principles
he may be prepared to advise the merchants
of his country ; he will find his time fully
occupied to learn them, and can leave the
details of the consulate business to the clerks
employed for the purpose.
Consuls and a Consular System. 247
A consul should also be selected with
some regard to his social attainments, and this
consideration ought to have special weight when
he is selected to represent his government in
an Asiatic nation. No people have a keener
insight into the social characteristics of a
foreigner than Asiatics, and a diplomatic or
consular success is frequently won at the fireside
or at a social meal, and a friendly word,
exchanged in the confidence of agreeable private
intercourse, may shape a policy of state or
avert a war.
The meagre salaries, comparatively, of the
consuls of the United States have long been
a subject of just complaint. One who is
qualified to fill a consular office ought to be
able to make more than a living in his
own country, and when sent abroad as its
representative his salary should be more than
adequate for his comfortable support and the
dignity of his official position. I do not mean
that a consul should accept office with the
view of accumulating money, but I do mean
that a government should pay its consul a
sufficient salary to enable him to live in the
style of a gentleman and return the hospitality
and other social and official amenities which
are the consequences of his official position;
and I would recommend that the consular
248 Chtna^s Business Methods.
system, which allows a consul to retain certain
fees as consular perquisites, be wholly abolished,
and that the consul be paid a fixed salary
and be required to account to his government
for all fees.
For further comparison, the diplomatic and
consular service of Great Britain in China will
be taken, because the diplomatic and consular
service of the United States is modelled after
it. The diplomatic and consular service of the
United States in China consist of a minister
whose annual salary is $12,000; one secretary
of legation, $2,625; ^ second secretary, $1,800;
one interpreter, $3,000; one consul-general,.
$5,000; three consuls, $3,500 each= $10,500;
three consuls, $3,000 each = $9,000 ; one consul,
$2,500; one deputy consul-general, $1,600; six
interpreters, $1,000 each = $6,000 ; one inter-
preter, $1,500; one interpreter, $600; four
marshals, $1,000 each = $4,000; one marshal,.
$500; one marshal, $750. It thus appears that
there are twenty-seven officers in the diplomatic
and consular service of the United States in
China at a cost in annual salaries of $61,375.
The annual salary of the British Minister
at Peking is $32,500, being more than half the
salaries of the twenty-seven diplomatic and
consular officers of the United States. The
British Consul-General at Shanghai receives as
Consuls and a Consular System. 249
salary $10,000, with $500 as Registrar of British
Shipping; the consul, $6,000; the vice-consuls,
$3,500, with allowance, as assessor in the Mixed
Court of an additional $1,000; another vice-
consul, $3,250; crown advocate, $2,500; and
chief clerk, $2,250. And if the amount paid
the student interpreters and under-clerks be
added the sum would be $40,000 expended on
its consulate-general at Shanghai alone, being:
$30,000 more than the United States spends on
their consulate -general at the great commercial
metropolis of Asia.
If the comparison be extended to the whole
of China, then it shows that Great Britain has in
the consular service in China sixty-four officers,,
and expends on the service $260,400 every
year. There is not a British consul in China
who does not receive a salary of $1,000 more
than the salary of the consul-general of the
United States, and $2,500 more than the highest
salaried United States consul.
And as Great Britain spends yearly on her
consular service in China $199,000 more than
the United States, so British trade with China
is valued at 65 per cent, of the entire foreign
trade of the Chinese Empire, which is ample
evidence that a properly organized and paid
consular service is one of the essential agencies
in promoting the commerce of a nation, a
:250 China's Business Methods.
principle recognized and maintained by the
British Government in its application to all
<:ountries.
Another feature of the comparison evidences
greater foresight and appreciation of the
importance of the consular office. At every
open port in China, and the same is true
throughout the world, the British Government
has purchased ground and built suitable buildings
for the residences of its consular officers and
for the transaction of consular business. That
is the policy also of the French and German
Governments, and when the consuls of the
British Government arrive at the ports to which
they are accredited they find a home prepared
for them, owned by their Government, and
invariably the most beautiful and conspicuous
home at the port.
At Shanghai the grounds of the British
•Consulate-General measure several acres, all
substantially enclosed, and on which are erected
several large brick buildings, one for the
consul-general and his family, one for the
-consul and his family, and the center building
for consular and court purposes.
The building at Shanghai in which the
business of the Consulate-General of the United
States is transacted is leased from year to
year, as the United States consular regulations
Consuls and a Consular System. 251
prohibit a lease for a longer term, and, in
1903, is a very inferior building, being the
repaired relic of an old and about to be
discarded Portuguese club-house. The Consul-
General of the United States lives in the upper
story of the house, and the rooms of the
lower story are used for offices. There is
nothing attractive in the appearance of the
building, and it is not creditable to the
wealthiest nation of the world at the com-
mercial metropolis of Asia. It may be said
that the commerce of Great Britain with China
is of so much greater value as to fully justify
the British Government in large expenditures
for its consular service in China, but it may
be answered, that such expenditures have con-
tributed to make that commerce large, and
British consuls have done their duty in
advancing and protecting the interests of British
merchants.
The merchant is appreciative of diplomatic
or consular assistance. An active minister or
consul in behalf of the merchants of his
country is not forgotten by them.
The statue to Sir Harry Parkes can be
seen from the deck of every ship that enters
the. port of Shanghai. It stands in the most
•conspicuotLS part of the city, and long years
ago^ when courage and skill were necessary to
252 China's Business Methods.
diplomatic success, this able British minister did
more to develop and extend foreign trade in
China, and to make China know her place,,
than any other diplomatic representative ever
sent to China by any nation. The times in
vsrhich Sir Harry Parkes lived were stirring
times, but he walked the stage of life like a
man, and his countrymen, in grateful recognition*
of his invaluable services, erected the statue
to his memory. It stands with its face
looking towards the scene of the labors and
triumphs of the fearless original, and faces the
foreign banks and business houses which he
did so much to foster and protect. It is a
touching and just tribute from the living to
the dead.
A government should own the building in
which its consular business is transacted and
provide a respectable residence for its consular
representative; the tenure of a consular officer
should be permanent, or during good behavior,,
or so long as useful at the port where
stationed; the consul should receive a fixed
and adequate salary and be required to account
to his government for all fees, and politics
ought not to enter into the question of
appointment, which should be a question of a
purely educational, business and social fitness.
When such considerations govern the appointment
Consuls and a Consular System. 253
of a consul the appointees will generally prove
more efficient in meeting the requirements of
the service.
And it is gratifying that the business men
of the United States are interesting them-
selves to perfect their consular system on the
lines indicated. A most important change, and
one that is also being demanded, is a separation
of the commercial and judicial features, now
combined in one officer. In countries where the
United States exercise extra-territoriality, there
should be an officer specially appointed to
preside in the consular courts, and without other
duties, thus keeping the judiciary separate and
independent.
Note. — The figures used above will be found sufficiently accurate
for practical purposes. They are expressed in gold.
^54 Chinas Business Methods.
MISSIONARIES.
The missionary was not sent to China as
an agent in the development of trade, but it is
doubtful if the merchant and the Commercial
Commission have found more paths for trade.
In his vocation the missionary visits the
interior provinces of the Empire and soon the
merchant is seen following close behind, and
it is thus that many valuable markets have
been opened for foreign products.
And in other respects the missionary, aside
from his special calling, has been of use to alL
The most instructive and accurate books written
on China and the Chinese have been written
by missionaries. The Middle Kingdom^ by
S. Wells Williams, is still the authority on
China; no writer has given such an exhaustive
view of the Social Life of the Chinese as
Justin Doolittle, • or laid bare the Intellect
of China as clearly and profoundly as
W. A. P. Martin, and, in Chinese Characteristics^
A. H. Smith has delighted and instructed the
English reader of all lands. In addition to the
books above named, which were written by
Missionaries. 255
American missionaries of the Protestant churchy
there are other books, written by missionaries
of the Catholic church, which have not been
surpassed in merit or the beauty of composition,
and among these are the Memoirs and
Observations of Louis Le Comte, and the
Chinese Empire by M. Hue. If the missionaries
had done nothing more than write the books
named they would deserve the highest
commendation.
The first attempt to introduce Christianity
into China was made by the Nestorians in the
sixth century. From the published accounts
they entered the West of the Empire and
resolutely pushed across the vast space of
desert and mountain ranges of that geographical
section. Details are wanting to show the full
extent of their work, but there is no doubt
they made many disciples and that afterwards
they lost their influence.
The famous tablet at Sing-an in Shan-si,
bearing date A.D. 781, and in Chinese and
Syrian characters, telling something of the
triumph of Christianity, is the only visible trace
of the Nestorian eflfort. Some time ago some
of the Nestorian sect were in Shanghai and
when I asked them about their history they
referred to the tablet at Sing-an as evidence of
their first attempt to teach Christianity in China.
:356 Chinas Business Methods.
The failure of the Nestorians did not
•discourage other Christian missionaries from
attempting to Christianize China ; in the
thirteenth century the Catholics entered the
Empire also from the West.
The Catholics were at first successful, and
when their influence began to decline it was
arrested by the zeal of Xavier, whose plans of
evangelization were conceived with the fervent
energy and comprehensiveness which have
brought so many triumphs to the Catholic
-church.
In 1580, Vaglinani, the Superior Jesuit
Missionary in the Far East, selected Matteo Ricci
and others, and sent them to Macao to push
their way into the interior, and for a hundred
and fifty years, from 1580, great activity was
displayed and many converts were made, and
after an effort of twenty-one years a Catholic
mission was erected at Peking. Success now
seemed assured, but the Benedictines and
the Franciscans and Jesuits, who had moved in
solid line, until a lodgment had been made in
Peking, no sooner planted the cross there than
discussions arose among themselves, when the
frequent appeals to the Pope caused confidence
to be shaken in their professions, and resulted
in the edict of 1736 for their expulsion. Then
a long period of persecution followed.
Missionaries. 257
At the beginning of the last century the
Chinese were no more favorably disposed to
mission work than previously, but the earnest
zeal of the missionary was inspired by a more
sanguine hope.
The discoveries of Vasco de Gama had
resulted in opening new ports in China, and
the London Society was the first Anglo-Saxon
missionary society to move China-ward, and
Robert Morrison was selected to be the pioneer.
The East India Company at the time enjoyed
a monopoly of the China carrying trade, but
when Mr. Morrison applied for a passage to
China on one of the company's vessels, he was
refused, and it became necessary for him to
voyage to New York, and from there sail for
China on an American vessel. He was nine
months in reaching Macao, and at Macao the
first regular Anglo-Saxon missionary laid his
plans for missionary work in China.
The cause of missionary work in China
received a decided advantage and impulse when
Vasco de Gama doubled the Cape of Good
Hope. This daring feat of navigation pointed
out a new route for commerce and more intimately
introduced Westerners to Asiatics ; and thus
it is that Christianity and commerce have ever
been the pioneer agents of the larger civilization
that follows, potentially aiding, the one the other,
17
258 China's Business Methods.
in extending the dominion of Christian culture
and the refinement of human wants.
Since the date when Robert Morrison
arrived at Macao, the English-speaking race
has been persevering in its effort to convert
the Chinese to Christianity, but the efficiency
of the work is not to be measured by statistics
alone. The number of Chinese converts to
Christianity doubtless proves the success of
missionary work in one sense, but to overcome
the difficulty of making Christian converts in
China includes other considerations as a test
of efficiency which are too often overlooked ;
and it is the severer test.
It should not be forgotten that China
existed as a nation more than two thousand
years before the birth of Christ, fifteen hundred
years before the founding of Rome, and seven
hundred years before the date of the Exodus.
And as it existed when history found it, so it
has existed during the intervening centuries,
with its ethics, customs, laws and prejudices
unchanged.
The most industrious and far-reaching
research into antiquity records that the Chinese
were governed by the same form of parental
government, which has stood unshaken amid
the fall of surrounding empires, and is as
influential in its life to-day. They are
Missionaries. 259
intrenched in centuries of prejudice and super-
stition, and behind a wall of conservatism
which has successfully withstood the intellectual
assaults of all former ages.
The family life of the Chinese opposed the
teachings of Christianity, and the lessons of
opposition had been taught at the family fireside
-throughout all known time, impressed by daily
examples and imbedded in the inmost heart ;
and thus the very center and force of opposi-
tion was the result of daily training, which the
memory of parental love and early association
kept fresh and strong.
/ The secret of the opposition to the
introduction of Christianity is therefore in the
family creed of the Chinese, and there the
correction must be made to insure success, and
it may be done if there be proper consideration
for long-standing convictions and prejudices.
And there is the vastness of the population
and area which give immensity to the opposition,
presenting difficulties to the penetration of
either, discouraging in insurmountability, except
to the most faithful and courageous disciple.
With a population of 400,000,000, and an area
of 4,270,000 square miles, the Chinese Empire
does not present an easy subject for spiritual
reformation, and when all ingress and the means
of travelling, until recently, have so long been
26o China's Business Methods.
barred by Imperial edicts, the results which the
missionaries can show certainly do not justify the
opinion in some quarters that their work has
not been efficient.
^ But the language of China is a more
difficult barrier than the size of territory or
the number of population. It appears to have
been fashioned to exclude successful communica-
tion with other nations, and it must be learned
to reach the Chinese and to know that the
translations of Christian literature into their
language are correctly made. The missionary
who undertakes the distribution of Christian
literature should be prepared to explain it to the
seeker after its truths in the language of the
seeker, and inability to do so is more
calculated to drive off the inquirer than to
convert him. The Christian churches of
Western nations, engaged in evangelical work
in China, could not move on safer lines than
to educate certain of their young men to
write and speak the Chinese language ; they
would probably be as successful in converting
as the young Chinese who are being educated
to speak and write English, and would be
competent to guard against their errors. And
it should be remembered that years of study
are necessary to enable one to even write and
speak the Chinese language moderately well^
Ur\ilVtr<6ITy
Mtssionarteh^c^^ ^^ ^ .
for, in the place of an alphabet, there are
twenty-five thousand hieroglyphics or ideographic
characters, each constituting a word, and out of
which there is a language exclusively for literary
use : to be seen, not heard, to be read, not
spoken ; and with a branch somewhat easier and
less stilted.
Then comes the language of the mandarins
or court language, spoken in the northern and
central provinces, and thus from such an
alphabet, as it were, three dissimilar languages
have been constructed ; these must be mastered
by the missionary before he can preach the
doctrines of the Christian religion to all classes
of Chinese in their native language.
But notwithstanding these primary difficul-
ties, the missionaries have met them with
patience and perseverance, and by their steady
efforts can point to the most encouraging results.
The statistics with reference to the number of
converts in China prove that both the Catholic
and Protestant churches are yearly adding to
their number, and that the records of each
church may, with confidence, be offered in proof
of their good work. New churches, hospitals
and schools are being built every year, and far
from the open ports these undoubted proofs of
the advance of Christian civilization may be
seen by the traveller dotting and beautifying the
262 China's Business Methods.
plains and valleys of China. Nearly every year
there are plans maturing for the erection of a
chapel, a school-house, or a hospital in parts
of China new to the Westerners, and in the
wake and around these silent witnesses of
Christianity it is easy to see that the mental
and domestic conditions of the people are
improving.
Thus far the Catholic church can show the
greatest number of converts, larger than the
added number of the diflferent Protestant
churches, as it also can show more enlarged
work in the establishment of schools and
hospitals, and this may be due to the fact
that the Catholics have been much longer in
China, and to the other fact, that they move on
the lines of evangelization with more singleness
of aim. The division of the Protestant churches
present them to the Chinese as a divided
Christian household, and weakens that moral
force which is stronger among an unchristian
and uncivilized people when under the direction
, of singleness of counsel.
The Catholic church concentrates its
energy and wealth in one direction, and to
the Chinese it presents itself in a singleness of
form which commands influence by the mere
ocular strength of such a position ; and
generally the Catholic schools are under the
Missionaries. 265
supervision and conduct of better educated men^
though in recent years the Protestant schools
have been much improved in this regard and
are now more influential than heretofore.
And the schools and hospitals have been,
and must continue for a long time, a great
reliance of Christianity in China. In the schools
the Chinese are taught how to read the great
Text of Christianity, and in the hospitals
they see the superiority of Western science in
relieving suffering, the one carrying conviction
through the brain and the other through the
eye. Money expended on schools and hospitals
is well invested by those who wish to promote
Christianity in China, but it is not to be
understood that preaching and the building of
churches are to be neglected.
But no one agency has been so powerful in
promoting Christianity as the mission press. It
is an agency that has been too much neglected
and the one that can be made the most effective*
The Chinese are beginning to read Western
books, and such as are translated and printed
are being rapidly sold and distributed. The
religious tracts that the mission press issues
are sent to all who can read and are the means
of benefiting many who cannot read.
There is no one who has placed before the
Chinese the real cause of their defeat in the
264 Chinds Business Methods.
war with Japan, in so convincing a manner as
Dr. Young J. Allen, in his history of the war
between China and Japan. Dr. Allen prepared
his history with careful attention to the causes
of China's defeat, and it was printed in the
Chinese language by a mission press and
eagerly read throughout China. The members
of the Central Government at once secured
copies of the history, and Dr. Allen has
received many pleasing testimonials from the
highest sources of Chinese official life. The
writings of Dr. Timothy Richard have also
been most influential in awakening the Chinese
to their true condition, and Dr. Richard and
Dr. Allen are mentioned by name because I have
an acquaintance with both, and they have been
kind enough to talk with me on the extent
and effect of their work. There are others no
less worthy of mention, and to those who
wish to have Christianity firmly established in
China the mission press and its influence are
specially commended to their consideration.
The opinion that would exclude missionaries
from China, or that which discredits their work,
cannot deny the right of missionaries to reside
in China and pursue their profession. The
treaties made by China give them this
right, and they should be protected on the
same principle that those engaged in other
Missionaries. 265
professions are protected. But if the work
of the missionary be judged by a mundane
standard, it is more generally civilizing, because
they go into the by-ways and highways and
mingle with all classes, while foreign officials
and foreign merchants associate with Chinese
•officials and Chinese merchants and are not
«o close in touch with the great masses of
China, and are not so well informed as to
•their wants and needs.
Commerce is indebted to the missionary
for many valuable markets. The merchant
often follows close behind the pioneer of
Christianity, well knowing that the better
•educated soon want the necessary comforts
which refine and elevate human thought and
nature throughout all climes and all races.
It can be again stated that the missionary has
found more markets in China for Western
products than the merchant or the Mercantile
Commission.
The attacks that have been made on
missionaries and missionary stations are
generally inspired by those who feel the
reproach which a virtuous life is to their
•own, and the reproach is not felt so keenly,
if at all, by the masses of the people of
China as it is by the class which have so
long blinded and prejudiced the people against
266 China's Business Methods.
all change and improvement ; and it is to the
writings of the literati that the missionary may
16ok for his most powerful foe. y^There is no-
one class in China so influential in forming,
and directing public opinion as the literati,,
and this class is untiring in the employment
of every means known to Oriental indirectness
and chicanery to defeat the spread of
Christianity, being more dangerous as a foe
than the official class, because far more capable.
The superstitious thraldom that holds China so-
strongly bound is the writings of Chinese
scholars, and there will be no liberation from
the slavery of such writings, with its false
dogmas and creeds, until there is, educated under
foreign tutelage, a counter-student class among
the Chinese, and it is therefore of the greatest
importance that the scholar in China, under the
superintendence of the Christian churches, or
under foreign supervision, should be supported
by all means necessary to success. The school
house and the mission press are joint agents
of great power for good, when under proper
direction, in all lands, and they will prove
especially so in China.
But the closing years of the nineteenth
century witnessed the introduction into China of
a new agency which is destined to revolutionize
the Empire in favor of a higher civilization,.
Missionaries. 267
and will prove, in one sense, the great preacher
and diplomat.
There are now being built and under
contemplation a sytem of railroads that will
more rapidly open up China, and do more to
remove the prejudices of Chinese, than any other
agency that civilization has ever enlisted in its
behalf. At and far off from the open ports
the contact with foreigners has demonstrated
that the Chinese, when let alone by ultra-
conservative advisers, are not averse to cultivating
friendly relations, socially and in business, and
that it is only necessary to give to the mass
of the people the opportunity to understand
the foreigner, in order to remove the prejudices
which they have been taught to cherish for
him.
The surveys now being made for lines of
railway that will connect Peking with Canton
are the streaks of the coming light which the
railway will pour, as it were, through China.
The resistance which has so long been made
to the establishment of new market-places in
the interior of China will yield before a power
greater than the sword or long standing
prejudices.
The sympathy and support of all desiring
the opening of China should be given to the
construction of railroads in the Empire, not
:268 China's Business Methods.
only because trade relations will thereby be
extended and made more valuable, but because
civilization will be promoted as well. The
question is not one that appeals solely to the
commercial mind, for it has a broader significance
and embraces within its answer all that refines,
enlightens and points the way to better things
and a grander destiny.
The opposition and reverses encountered
and sustained by the missionary in the past,
but which have never daunted his purpose, are
no longer to be encountered to the same extent.
The edicts which banished the Christian religion
from China have been repealed, and freedom of
conscience and thought is permitted by official
edicts throughout the wide realms of the Chinese
Empire. Whatever may be the policy of the
Central Government, or the disposition of the
provincial officials and literary class, the law
of China gives the Christian missionary the
right to purchase land, in the name of his
church, and to build a church on it and to preach
therefrom the Gospel of Christ. He is free to
disseminate the truths of that Gospel, without
let or hindrance, and it now devolves upon him
to exercise the proper respect for the prejudices
and opinions of the people among whom he has
elected to live in order to convert them to his
own convictions. Dogmatism in any sense will
Missionaries. 269
not make such conversions to Christianity as
Christ taught would prove its pillars of strength.
The mind must be convinced by the simple
presentation of truth and every semblance of
mental impatience or compulsion should be
avoided. And there are many truths in the
philosophy of Confucius which do not diflFer from
the truths of Christianity, and there need not
be any wholesale attempt to drive the Chinese
from every previously conceived conviction.
What is true in the writings of Confucius should
be admitted and presented as true, thus finding
an easier way to the Chinese mind by causing it
to reflect, that truth has been truth throughout
all time and that Christianity is but the truth.
The failure or refusal to recognize the
equity of this view has led to friction which
Christian churches should ever be on the alert
to avoid, not surrendering any doctrines of
Christian faith, but remembering that it is
more difficult to overcome prejudice and
superstition than mental conviction.
Note. — In one of his essays on "The Chinese Question"
Sir Robert Hart has this to say with reference to missionaries
in China : —
"As for the missionary class, their devotion, zeal and good
works are recognized by all; and yet, while this is so, their
presence has been felt to be a standing insult, for does it not tell
the Chinese their conduct is bad and requires change, their cult
inadequate and wants addition, their gods despicable and to be
12JO China's Business Methods.
<:ast into the gutter, their forefathers lost and themselves only to
be saved by accepting the missionary's teaching? As for the
accusation that converts trouble the localities they appear in, it
may be asked : Have they anywhere been numerous enough to
do so, and have they not always had, on the contrary, to go
humbly to avoid trouble? Doubtless soidisant converts have seen
a way to make a great gain of a profession of godliness, but that
they are able to do so, who is to blame but the Chinese local
authorities themselves? And as for the charge brought against
the missionaries, that they take up converts' cases and intervene
between litigant and magistrate, may it not be inferred that if
they do so it is only when they are certain of the justice of their
friend's case, and only do so to secure justice and prevent
injustice, and not that they interfere to bolster up a bad case
to wrong even a pagan ? Missionaries may have been deceived
<x:casionally or they may have acted injudiciously occasionally,
but has not the decision rested always with the Chinese
magistrate; and is it likely that the advocacy or intervention of
these isolated and unprotected strangers could have compelled
officials to decide unjustly, or that their doings could so upset
whole neighborhoods as to call for such a remedy as extirpation
or such vengeance as that with which the Footai Yfl Hsien and
his Boxer myrmidons rendered infamous for ever the Governor's
Yamen at Tai-yuan-foo ? Nevertheless, whatever may be written
in excuse or justification of missionary action or to absolve
<:onverts from such accusations, it is and remains a fact that in
the eyes of the community to accept a foreign faith is to insult
a native creed, and to become a Christian requires a man to
withdraw from local practices and thereby offend neighbors, and
it may also be said to be a fact, so many Chinese complain of
it, that scamps become Christians to bring a new kind of influence
into courts where litigation goes on, and that missionaries have
themselves injudiciously interfered to shape magisterial decisions ;
it does not require many such facts to establish dangerous
possibilities in the popular imagination, and so lay foundations
for suspicion and hostility, and while local gossip will not fail
to accentuate what is objectionable in every such occurrence, flying
rumour will as surely both magnify and scatter it far and wide."
Missionaries. 271
In March 1878, the Chinese Foreign Office addressed a
Circular Letter to Chinese Ministers abroad in which the views
of the government of China are clearly set forth on several
important questions, and the following is Section 9 of the letter
on the Missionary Question : —
"Over and above the four points commented on there is
the missionary question. China, recognizing that the object of
all religious systems is to teach men to do good, has by treaty
assented to missionaries coming to teach their doctrines in China,
and has also guaranteed protection to them and to their converts.
But among the missionaries are some who, exalting the importance
of their office, arrogate to themselves an official status, and
interfere so far as to transact business that ought properly to be
dealt with by the Chinese local authorities ; while among their
converts are some who look upon their being Christians as
protecting them from the consequences of breaking the laws of
their own country, and refuse to observe the rules which are
binding on their neighbors. This state of things China cannot
tolerate or submit to. Under the extra-territoriality clause foreigners
are to be dealt with by their own national authorities, but as
regards Chinese subjects on Chinese soil, it is only the Chinese
authorities who can deal with them, and Chinese subjects,
whether Christians or not, to be accounted good subjects, must
render an exact obedience to the laws of China; if any offend
against those laws, they must, one and all, Christians or not
Christians alike, submit to be dealt with by their own native
authorities, and the foreign missionary cannot be permitted to
usurp the right of shielding them from the consequences of
their acts."
Sir Robert Hart has been the efficient head of the Imperial
Maritime Customs of China for many years, and probably knows
the inner mind of the Chinese better than any other foreigner now
living, and whatever he writes on Chinese questions will always
merit the most careful attention. If the Chinese do regard
the presence of Christian missionaries as a standing insult to both
their gods and conduct, it is doubtful if they are really half as
much concerned about the religious feature as they are about the
presence in their country of the foreigner who represents that
272 China's Business Methods.
feature; it is suspected that therein is their opposition. No one
knows better than Sir Robert Hart that the government of China
does not want foreigners in China, and this was evidenced at
the seige of Peking, when Sir Robert himself, the venerable
Dr. W. A. P. Martin, and others who had rendered the most
valuable services, and for long years had proved themselves true
friends to China, were shot at along with strangers, and would
have been massacred along with them, but for a valor and
endurance by all, of which history will preserve to their credit
and to the discredit of China. It is not the office of a Christian
missionary to either wish or to attempt to force his religion on
the Chinese, and it is not done; the Chinese are at perfect liberty
to receive or reject it, and it should not be considered an insult
to their gods when they have such entire volition on the subject.
The Chinese do not concern themselves with regard to religion to
the extent of taking the subject very seriously, and if it be that
they do resent Christianity as an insult, the reason may possibly
be found in the injudicious course of some missionaries, but all
missionaries, and their work in China, cannot be justly judged by
a few whose course might be properly visited with the severest
reprehension of the Christian churches. There may be some
missionaries in China, as in other lands, ''who live without blame,
and without praise," and some, such as Dante would "mix with
that caitiff choir of the angels, who were not rebellious, nor were
faithful to God; but were for themselves." No people adhere
more closely to custom than the Chinese, and whatever opposes
their customs have met with violent opposition from them, for they
have opposed the introduction of foreign merchandise as strongly
as they ever opposed the introduction of the Christian religion. In
this connection the counsel of Abbe Hue is deserving of the
careful consideration of all missionaries: "It is by instruction, not
controversy that the conversion of the heathen is to be efficaciously
operated. Polemics may reduce an adversary to silence, may
humiliate him, may sometimes irritate him, but they will never
convince him. When Jesus Christ sent forth his disciples, he
said to them. Go forth and teach all nations, which does not
mean, Go forth and hold controversies with all nations. Carry
light with darkness and the darkness will disappear."
Pacific Ocean — The Arena. 275
unfavorable showing against China is due to
her isolated policy and her . internal fiscal
regulations, which destroy the very vitality of
commercial industry.
In approximating the possibilities of the
future trade of China, one may turn to the
record of the trade of India, as the area of
that Empire is about the same as the area of
China, and there it appears that China, with
almost fatal disadvantages for trade, stands
more favorable in comparison ; and this fact
clearly indicates that, when China reconciles
herself to a system of government similar, in
industrial aspects, to the system under which
India is administered, there will be but few,
if any, countries whose^ commerce will figure
more largely in the international balance-sheet.
The comparisons between the trade
conditions of Japan and China cannot leave a
doubt as to the immensity of China^s trade
when the Empire attains even the moderate
development attained by Japan and India. By
every reasonable standard of comparison the
future trade of China will over-shadow in
value that of all other Asiatic nations, and
that of many Western nations as well.
The battle of empires in the arena of the
Pacific wull be a contention for the trade of
China, and the nation that is alive to the
276 China's Business Methods.
influence of strategical positions in directing
the course of this trade will share the larger
proportion.
/ Many years ago, the founder of the Bank
of England, William Patterson, looked to the
Pacific as the commercial arena and wrote
these words : " If neither Britain singly, nor
the maritime powers of Europe, will treat for
Darien, the period is not very far distant when,
instead of waiting for the slow returns of trade,
America will seize the pass of Darien.
Their next move will be to hold the Sandwich
Islands. Stationed thus in the middle, on the
East and on the West side of the new world, the
English-Americans will form the most potent
and singular empire that has appeared, because
it will consist, not in the dominion of a part
of the land of the globe, but in the dominion
of the whole ocean. They can make the
tour of the Indian and Southern Seas,
collecting wealth by trade wherever they pass.
During European wars they may have the
carrying trade of all. If blessed with letters
and arts they will spread civilization over the
universe.'*
The prediction of Patterson has partly
been verified, for America is in possession
of the Sandwich Islands, not, however, by
seizure, but by peaceful annexation, and the
Pacific Ocean — The Arena. 285
1903 is engaged in opening. Before the close
of the nineteenth century, the Russian domain
had been extended to the Pacific Ocean and a
railroad had been built uniting Vladivostock and
St. Petersburg, the Pacific and the Baltic.
Three centuries ago Russia was not known as
a European power, and was without influence
in the politics of Europe, but to-day, while the
capital of Russia and the greater number of its
population are in Europe, more than 6,000,00a
of its 8,500,000 square miles are in Asia, and
Russia for three centuries has been constant in
aim and energetic in diplomacy in effectuating
the plans of Prince Golitsyn.
But Russia's movement towards the Pacific
is justified by laudable considerations in the
interest of the development of Russian industries
and the amelioration of the condition of
Russians, and it is in fulfilment of a natural
principle so clearly stated by Clarke: "When
the territories of two great powers are separated
by a vast tract of country offering no marked
physical barriers, and sparsely populated by
nomad tribes or uncivilized states mutually
hostile, stability of frontier is impossible, one
or both of the great powers must inevitably
advance, absorbing the intervening territory,
until the two powers come into contract at
some boundary established by treaty and
286 China's Business Methods.
formally delimitated. The history of the world
shows that a strong and progressive power,
unrestrained by any great natural boundary,
will always expand into the territory of
uncivilized and unhomogeneous neighbors. The
great Empires of the old and of the modern
world have thus been created. The force of
inevitable natural expansion is something quite
apart from, and slower, but more certain in
its action than such great waves of invasion as
that of the Tartars which almost engulfed
Russia in the thirteenth century. To the
operation of this force, the consolidation of the
United States, pr our (British) Indian Empire,
and of Canada is due. In Africa, the process
is going on; but the end is near at hand,
since the expanding powers are now nearly in
contact at all points. At the beginning of the
last century, when Russia was pressing back
the Persian frontier and aiming at the command
of the Caspian Sea, Great Britain had absorbed
Bengal and moved West along the line of the
Ganges beyond Delhi. Central and Western
India were still independent. Henceforth the
sphere of influence of the two great powers
steadily and inevitably tended to approach, the
expansion of Great Britain proceeding at much
greater speed than that of her rival. The
annexation of the Punjab by Lord Dalhousie in
Pacific Ocean — The Arena. 277
completion of the Panama Canal, which will
also belong to America, cannot longer be
delayed ; and the fortunes of waif have added
other islands to the dominion, of the nation
that has made the most rapid advance in
letters and arts — one that seems commissioned
to spread civilization and collect wealth by
trade.
In the year 1903, the people of the United
States seem to have comprehended the
responsibilities and duties enjoined by their
high state of civilization, and to have realised
the destiny before them. They are preparing,
as never * before, to meet that destiny so far
as human foresight is premitted to look into
the future ; and the first consideration in
importance is the recognition, that the center
of gravity of world-trade and world-power is
moving from West to East, and to share that
trade and power, the other consideration, that
the Pacific will be the arena on which it will
be won or lost, must also be recognised.
The acquisition of the Sandwich and
Philippine- Islands strengthens the position of
the United States for the coming contest, and
the completion of the Panama Canal is only
necessary to make the acquisition doubly strong
and success doubly sure. The territory of the
United States, now depending for commercial
278 China's Business Methods.
outlets on the Pacific Ocean, fully warrants
the favorable opinion here expressed, and when
developed by American industry will prove to
be both a source of revenue and of strength.
The territory of the United States proper,
depending on the Pacific Ocean as a commercial
outlet, comprises an area of 800,000 square
miles, but of the eleven states included in this
territory, three only have actually a sea-board ;
and heretofore so little attention has been
given to the shifting of the world-trade and
the world-power from West to East by the
people of the United States, that the eleven
states represent but 6 per cent, of the population
and ID per cent, of the wealth of the United
States ; but in proof of the rapid increase in
wealth of sea-board territory over inland, the
three sea-board states possess about 60 per
cent, of the wealth of the eleven composing the
group, and, within the territory of the three,
the seventh city, San Francisco, of the United
States is situated. To this territory of the
United States proper, which depends on the
Pacific for an outlet, can now be added that
of the Sandwich and Philippine Islands, the
former adding an area of 6,700 square miles,
and the latter 114,000 square miles; the one
containing a population of 80,000 and the
other of 8,000,000, and with climates and soils
Pacific Ocean — The Arena. 279
favorable and fertile for the production of
every necessary of life and almost every
commercial product. In area of territory the
Sandwich Islands measure nearly as much as
both the States of Connecticut and Delaware,
and in population the number exceeds that
of either of the States of Washington, North
Dakota or South Dakota, while the area of the
Philippine Islands is more than the added area
of New York and Illinois, and in population
more than that of the two states of New York
and Indiana. These new acquisitions give new
and better advantages and bring new duties
and responsibilities, but the people of the
United States will not fail to properly utilize
the one and appreciate the other in the interests
of their commerce and civilization. At the
close of the nineteenth century, the United States
enters the area for commercial superiority and
the expansion of their civilization, but they will
meet in that arena other nations which have
been thoughtful of the struggle, appreciative in
foresight of the preparation necessary to appear
as a worthy competitor, the one against the
other.
The key to the Eastern entrance of the
Pacific is already in the possession of Great
Britain; and Russia, Germany, and France are
entrenched on the shores of that ocean.
38o China! s Business Methods.
**A11 the long water route to the East,
which is also the far West, is under our
(British) control. Gibraltar, Malta, Cyprus,
mark our way to the Suez Canal over which
we hold a controlling hand. At the mouth of
the Red Sea we keep guard at Aden, Perim,
and on the Somali coast. We are supreme on
the Eastern Ocean; the Indian Peninsula is an
integral part of the British Empire, through
the portals of the Straits of Malacca we possess
the outlet to the Western Pacific; and there
we own more territory than any other country
in the world, save China. Our political position
in the Pacific is too critical, our commercial
and financial interests there are too vast, for us
to allow the Western water route to fall under
the absolute control of any other power, even
of a friendly power like the United States.
We cannot prevent the building of purely
American railways from the Atlantic to the
Pacific, nor a Russian railway from Russia to
the Manchurian sea-board. But railroads will
never supersede ocean traffic, nor serve for
the deportation of warships. Great Britain is
territorially and commercially far more of a
Pacific power than is the United States, and
it is essential to her empire to have a share
in any Atlantic-Pacific waterway that may be
constructed.*'
Pacific Ocean — The Arena. 281
The above quotation, from Taylor's article
in the Nineteenth Century accurately portrays
the commercial and political power of Great
Britain in the Pacific Ocean, and as loyally
the precautions that are thought necessary to
guard and preserve that power ; and the
commercial and political power of the United
States is second only to that of Great .Britain,
especially the commercial power in China,
and the agency to make the power of the
United States equal, if not superior to that of
Great Britain in the Pacific and in China, is
for the United States to cut and own the
Panama Canal.
No nation has ever been so strongly
entrenched in territorial, commercial and political
power, at any period of history, in the affairs
of the world, as is Great Britain, and no
people have ever accomplished as much for
civilization as the British, but this is because
the energies of the people of the United
States have been concentrated on the develop-
ment of their domestic wealth and industries,
and not because they are deficient in the
genius, talent and courage to go into the
outer world to civilize by just laws and bless
with Christianity. Being members of the same
race, Americans and Britishers should shape
the future course of the world's history, but
282 China's Business Methods.
there can be no advantages admitted on the
part of the one which justly belongs to the
other, or which mutual interest or the general
good demand should be shared by both, for
in the Union which, sooner or later, must be
more than impliedly understood, to preserve
the world's peace and the world's best
civilization, there should enter no such element
as writers like Taylor would introduce.
In the Northern Pacific the British flag
protects and claims the allegiance of a continent,
as it were, and the organization of an
** Australian Federation" will concentrate the
industrial energies of six flourishing colonies in
the direction of British commercial interest in
the Pacific, and introduce a new power that
the outside world will have to take more
seriously into account. The colony of Victoria
alone is twice as large in area as the State
of Pennsylvania, while that of Queensland is
fifteen times the size of that state ; South
Australia is twenty times the size of
Pennsylvania or New York, and fifteen times
the size of England and Wales, and Western.
Australia is the largest colony of the six
composing the Australian group. In all the
seas of the world, waving from islands and
ships, the flag of the British Empire catches,
the eyes of the traveller, until finally it has-
Pacific Ocean — The Arena. 285
been planted on the mainland of China, at
Weihaiwei, to cover with its influence as much
of that mainland as British diplomacy may
win.
Possessing an empire in the South Pacific^
nearly equal in area to the United States, and
another in North America which measures 3,000
miles from the Atlantic to the Pacific, and
covers an area larger than the area of the
United States, the necessity for the acquisition
of the Sandwich and Philippine Islands is made
more apparent, if the United States are
unwilling to be driven from the commercial
arena of the Pacific and locked up within
their own boundaries. And there is the British
colony at Hongkong, which, although so near
the mainland of China, yet has a trade, sa
important as a distributing center, that it is
given a separate column in the Customs'
reports of China. The trade of Hongkong with
China for 1902 is valued at Hk.Tls. 216,181,544,
a great depot, where many of the imports
and exports from and to Great Britain, America,
Australia, India, the Straits and the coast
ports of China, are stored for reshipment.
Why may not the Philippine Islands — the
Port of Manila — be made a great depot for
the trade of the Pacific, and the Sandwich
Islands the resting-place for supplies and trade
J 84 Chinas .Business Methods.
for the ships of all nations? These are well
selected strategical positions in peace or war,
and it is such, and not the mere area of
territory, that promotes commerce and makes
wealth.
There is indeed « converging of the great
nations of the world towards the Pacific ; but
the movement of no nation in that direction
has elicited the same degree of attention, in
the chancellaries of foreign aflfairs, as the
territorial and political expansion of Russia.
The Asiatic division of the Russian Empire
embraces more than a third of Asia and nearly
one-seventh of the total land area of the
globe, but this immense territory is thinly
populated, and it is Russian activity, in preparing
the agencies which will populate this immense
territory and develop its hidden wealth, that
excites attention. As early as 1683, Prince
Basil Golitsyn, the then Russian Minister of
Foreign Affairs, planned for the development
of commerce with China by way of Siberia.
Peter the Great was but a mere boy, and
there was no public opinion in Russia to
produce or support important radical changes,
but the field was left open to the genius of
Peter the Great who, when coming of age
and assuming the direction of the policy of
Russia) saw the way which his successor in
Pacific Ocean — The Arena.
PACIFIC OCEAN— THE ARENA.
If the population of the world be estimated
at one billion and five hundred millions, then
one-half of that number may be found in
countries bordering on the Pacific area, and
one-fourth of it in the Empire of China.
And it may be accurately written that, of the
inhabitants of the Asiatic Continent, a small
per cent, only have ever experienced the
influence of Western civilization, or whose wants
have been measured by any of the necessities
of that civilization.
As late as 1854, even Japan was as
positive in adhering to a policy of exclusion
as China, and was probably more tenacious^
but in 1854 the American Commodore Perry
anchored the naval squadron under his command
in the waters of Japan, and subsequent
negotiations soon resulted in opening some of
the important ports of the Island Empire to
foreign trade.
Since the year 1854, Japan has been
throwing off" her cloak of exclusiveness, until
now she appears in the full panoply of
18
274 China's Business Methods.
sovereign rights in all her relations with the
nations of the earth. The record of her internal
as well as external trade testify to the industry
and competency of her people, and to the
suitable and orderly system of government
under which such solid wealth has been
accumulated, and to the confidence which
pervades the various branches of industry. A
reference to the record of Japan's external
trade, in comparison with that of China's,
convincingly proves that Japan, with a population
of less than one-seventh, and far behind
China in natural resources, iias immeasurably
surpassed her colossal neighbor in , all the
achievements that are attended with wealth
and security ; and thi^may be because Japan
spends about as much as China ^on foreign
goods.
While the foreign trade of China, since
1890, shows an average increase, and in 1902
was valued at Haikuan Taels 529,545,489,
yet if, during the same period, the ratio of
increase had equalled that of the foreign trade
of Japan, it would, if such a ratio continued
for twenty-five years, be worth then as much
as two billions of gold dollars. The
distinguishing increase in the trade of Japan
can be attributed to the intercourse which she
has cultivated with other nations, while the
Pacific Ocean — The Arena. 287
1849 carried our territorial frontier across the
Indus right up to the base of the Afghan
Hills, finally extinguished the long rivalry of
the native Indian powers, and absorbed under
our sovereignty the last kingdom that remained
outside of the pale of British Empire in India/'
By this time Russia had subdued the Southern
Kurghis and founded Kopal, near the frontier
of the Chinese province of Kuldja; but the
advance from the Caspian through the Zekke
country towards Herat has scarcely commenced,
and Khiva, only 200 miles from the Sea of
Aral, was not taken till 1873." "And,'' says
Sir Alfred Sydall, ''What did this new
departure of Lord Auckland's interference in the
affairs of Afghanistan in 1838 imply? Not that
the British had any quarrels with the Afghans,
from whom they were separated by five rivers
whose floods unite in the Indus. It meant that,
after half a century's respite, the British were
again coming into contact with a rival European
influence on Asiatic ground." And there has
been always in the British Foreign OflSce an
eye wide open to every advance made by
Russia, continuously protesting against Russian
occupation of territory, but, since 1884,
annexing or bringing under British influence
enough of the earth's surface to increase the total
of the British territory about one-third.
288 China's Business Methods.
The rapid extension of Russian territory
and influence into China, until the Russian flag
now protects Port Arthur, a strong fortress on
the mainland of China, was one of the results
of the recent war between China and Japan,
when the intervention of Russia was mainly
instrumental in securing the retrocession of the
Liaotung Peninsula, which China had ceded to
Japan in the treaty of Shimenoseki. And China
supposed that Russia was again manifesting a
disinterested friendship in materially assisting
in negotiating the loan for money to pay off
the indemnity which China obligated in the
treaty to pay Japan. Then, as another move
in Russians diplomacy, China was requested
to send Li Hung Chang to represent China
at the coronation of the present Emperor of
Russia, and it is said that no ambassador
from any other nation received as much
consideration at the Russian capital as this
special ambassador of the Emperor of China.
In return for Russia's manifested friendship,
the public was soon afterwards made aware
of the existence of a treaty between Russia
and China, which was thought by many to be
the true motive power of the many privileges
Russia was gradually showing as a part of
her enjoyment and rights in China ; and this
treaty, which for some time was a secret now
Pacific Ocean — The Arena. 291
Southern Persia to India, and thence through
Burmah, but in any case it cannot be for
many years to come, and the distance will in
no instance be less. In the question of fares and
freight rates, the Russian line will always have
the advantage in being under one individual
control. Against the trans-Siberian line the
existing steamship lines will be powerless to
compete except for heavy goods, and the
mails will certainly take the shortest and
quickest route; and the Russian government is
preparing to take every advantage of the
construction of the trans-Siberian railway by
a line of steamers designed for freight and
passenger service between a Russian Baltic
port and British and Western European ports,
and wherever else it may be to the interests
of Russia.
The policy that would deny to Russia an
outlet to the Pacific would not be just, but
the policy that would oppose the necessary
influence to the closing of any Chinese market
to the free competition of foreign products,
would be fully justified by every proper
consideration a nation should have for the
protection of its interests.
The trade between China and the Continent
of Europe, Russia excepted, was valued at
Hk.Taels 58,213,315 for the year 1902, which
292 China's Business Methods.
is only Hk.Taels 3,134,450 more than the
trade between China and the United States,
while the trade between China and Russia vid
Odessa by sea, Russia and Siberia vid Kiakhta,.
and Russia and Manchuria add up to
Hk.Taels 12,146,140, which is Taels 43,932,725
less than that of the United States with
China, comparative figures showing results that
give the United States the right to inquire about
the purpose of those nations of the Continent
of Europe that are establishing themselves
in the territorial limits of China, and
about their future intentions in reference to
trade, and the inquiry will be more pertinent,
on the part of the United States, since Russia
and Germany have planted their flags in those
parts of China's territory where the United
States have a most valuable cotton piece goods
trade.
The Germans have not been successful as
colonizers because the military idea predominates
over the civil, but they are energetic and com-
petent and their trade in Asia is showing an
encouraging increase. Of the German colonies
Tagoland is the only self-supporting one. Their
expense to the home government was estimated
for 1898-99 at j^ 461,000 and ;^ 17,000 deficit,
carried over from 1895-6, an increase of
^59,000 over the State subsidy granted in
Pacific Ocean — The Arena. 293
1897. The area of German possessions in
Africa is given at 820,648 square miles ; the
•entire trade of the African colonies for 1897
amounted to ;^i,657,7i8, of which ;^i, 110,000
were imports and ;^547,7i8 exports, these
latter being a little over the government
•subsidy, and only 42 per cent, of the entire
trade was with Germany.
Whether the colony which Germany has
established in China at Kiaochau will prove more
prosperous the future must decide, but it is
believed that it will, for Germans are generally
good linguists, learning the native language with
more than the usual facility, and satisfied to
sell their home products on small margins.
The Bay of Kiaochau can be made a good
harbor, and is an open port for the province of
Shantung, which is one of the rich mineral
provinces of China. The Government of the
port and the territory surrounding, within
certain definite limits, will be under the sole
control of Germans, and all concessions
looking to the development of the province
are to be first refused by Germans, giving them
the monopoly of the province in whatever
pertains to the development of mines or the
building of railroads, and consequently a
monopoly also for German products.
And it should be carefully noted, that
294 China's Business Methods.
the possessions of Russia, Germany and France
on the mainland of China have been acquired
under peculiar circumstances, as if in accordance
with some agreed plan of those nations, and
with exclusive conditions connected with each
acquisition. But France has not succeeded so
well as her partners, though claiming the
province of Yunnan and the exclusive privilege
to develop it on lines promotive of France's
interest.
The colonial possessions of Germany in the
Western Pacific, and the recently acquired
possession of the mainland of China at Kiaochau,
have decided German business men to compete
more earnestly for the trade of the Pacific,,
and this has rapidly developed the manufacturing
industry of Germany, which has in recent
years enormously increased the trade and
commerce of the country.
France is also a colonizing nation, but
the French have also failed as colonizers. The
African possessions and dependencies of France
have an area of about 2,300,000 square miles,,
with about 9,500,000 inhabitants, while in Asia
the French possessions extend over less than
200,000 square miles, with a population of
about 20,000,000. In addition to the above,,
France possesses two excellent fishing stations
in the Gulf of St. Lawrence, St. Pierre and
Pacific Ocean — The Arena. 295
Miquebon, close to the coast of New-
foundland ; two fertile West Indian Islands^
Martinique and Guadeloupe, beside the tropical
colony of Cayenne or French Guiana, in
South America, and in Oceania, France
owns a total area of 9,000 square miles.
The several indications of the geographical
advantages of the nations which are more likely
to prove important factors in the trade of the
Pacific, naturally leads to the consideration of
the commercial value of the Pacific Ocean.
Remove the barriers which separate the
waters of the Pacific from those of the Atlantic,,
and America, said Maury, is placed midway
between Europe and Asia, and the Carribean
Sea becomes the center of the world and the
focus of the world's commerce. At the present
the Eastern producing states of the Atlantic
sea-board are practically cut oflf from a consum-
ing area, which contains about three-fourths of
the consuming population of the world, but
when the Panama Canal is cut, and the waters
of the Pacific are united with those of the
Atlantic, the demands of this vast consuming
population will be placed in the nearest
producing markets, which will be the markets
of the United States.
The wonderful growth of the railway and
steamship traffic on the coasts of British
296 Chinas Business Methods.
Columbia and the United States attests the
importance of the Pacific, and by glancing down
the coast there is seen the distinctly growing
trade of Chili, Bolivia, Peru, Ecuador, Columbia,
Mexico, and Central America ; and the latest
returns of the import and export trade of the
Western sea-board of the American continent
amounts to no less than ^^93,000,000 per annum,
not including the coasting trade. Glancing at
the map in another direction there is Oceania,
Hawaii, Samoa, Fiji, New Guinea, New Caledonia,
the Philippines, Dutch East India, Society
Islands, and other groups, the figures given,
exclusive of inter-island trade, amount to
j^59,25o,ooo, the foreign sea-borne trade of
Australia alone being valued at ;^i 36,000,000.
If the larger field of the Far East be
entered, there is the sea-borne trade of the
China treaty ports approximately valued at
;^78, 500,000 ; Hongkong, ^^10,000,000 ; Japan,
;^40,ooo,ooo ; Korea, ;^ 2, 500,000 ; Siberia,
;^5,ooo,ooo ; Siam, ^10,500,000 ; French Indo-
China, ;^i 1,500,000 ; Straits Settlements, etc.,
^^76,500,000 ; Burmah and British India,
^200 , 000 , 000 ; - aggregating the sum of
^429,000,000, and making a total of the value
of the sea-borne trade of the islands and
countries named of ^717,250,000.
If the coasting trade of Pacific America
Pacific Ocean — The Arena. 297
be estimated at ;^6o,ooo,ooo, the Pacific Islands
at ;^ 1 0,000,000, and that of the Asiatic Pacific
at ;^200,ooo,ooo, with Australia at ;^ 12,750,000,
the commercial value of the Pacific shows the
grand total of ;^ 1,000,000,000 ; and a more
valuable trade may be reasonably expected,
and this total annually increased by the energy
and industry can be the competing nations in the
Arena of the Pacific.
Note — The July number of the North American Review, 1903,
contains a paper by Mr. O. P. Austin that should excite the renewed
interest of the business men of the United States in the Pacific
Ocean as a commercial arena. Mr. Austin is the Chief of the
Bureau of Statistics of the United States Treasury Department,
and the statistics adduced by him show that President Roosevelt
was not idly prophecying when directing the attention of his
countrymen to the importance of the mastery of the Pacific Ocean
to their future commercial interests. Mr. Austin estimates that
American exports have grown from seventy million dollars in
1800 to fourteen hundred millions in 1900, and that the exports
of manufactures, during the same period, have increased from two
millions to four hundred and thirty millions. If the distribution
by grand divisions and the relation of manufactures to total
exports be compared, then about one-half of the total went to
Europe, one-fourth to North America, 11 per cent, to Asia,
7 per cent, to Oceania, 6 per cent, to South America, and
.3 per cent, to Africa. Manufactures formed practically
20 per cent, of the total exports to Europe, 33 per cent, of those
to Africa, 52 per cent, to North America, 62 per cent, to South
America, 68 per cent, to Asia, and 80 per cent, to Oceania.
Another important fact is that the share which manufactures
form of the total exports has steadily increased, while the general
exports have been so rapidly growing. The total exports have
298 China's Business Methods.
doubled since 1879, ^ut those of manufactures have practically
quadrupled meantime. The growth in the progress of manufac-
turing is made to appear by comparing the increase in production
with that of other great manufacturing nations. The four great
manufacturing nations of the world are the United States, Great
Britain, Germany and France. The growth of the United States
has been more rapid than that of any of the others, having, in
the short period from i860 to 1888, passed from the foot of the
list to its head. But the period from 1888 to 1894 gave the
United States much greater prominence. The actual increase in
the value of manufactures produced in these four countries from
l888 to 1894 was : — France $808,000,000, Germany $1,362,000,000,
United Kingdom $1,455,000,000, United States $7,591,000,000.
Mr. Austin is not satisfied with showing the steady growth of
the United States as an exporting, manufacturing and producing
nation, but proves that the principal articles which form the
great and rapidly increasing exports are such as the world will
continue to require as a part of its daily life, and names iron and
steel, mineral oil, copper manufactures, cotton manufactures, leather
and its manufactures, agricultural implements, chemicals, wood
manufactures, carts and carriages, and paraflfin. These ten articles,
or groups of articles, made up more than three-fourths of the
total manufactures exported, and every one of them is of a class
for which the world's demand is permanent and constantly
increasing. My purpose in referring to, and quoting from,
Mr. Austin's interesting paper is to impress as much as I can
the great importance to the United States of the "Mastery of
the Pacific Ocean," and especially to the states on the Pacific
slope and their energetic inhabitants. I do not understand that
the *' Mastery" would mean hostility to any nation, but rather the
preparation necessary to fully protect American interests on land
and sea against hostility to the United States from any and all
quarters. The phe nominal growth of the export trade of the
United States clearly enjoins the duty of such adequate
preparations as will secure for America an equality if not a
superiority on the principal seas of the world.
One of the most influential journals of the United States,.
The Baltimore Sun, recognizing the important bearing of this-
Pacific Ocean — The AHiuu ..:-^299
subject, contained the following as a leading editorial, in one of
its July numbers, under the heading "The Panama Canal and
Commercial Supremacy."
"There are French economists and students of world politics
who believe that the construction of the Panama Canal by the
United States Government wiil be followed by the decadence of
Europe; that Baron Humboldt's prediction that the commerce of
the Pacific will some day surpass that of the Atlantic will be
realized ; that Benton's assertion that * the rule and empire of the
world belong to the route to the Indies and to the country
which controls the commerce of that route' will be proved by
coming events to have been a prophetic inspiration ; that
William H. Seward's prophecy that 'the Pacific Ocean, its shores,
its isles, and the vast regions beyond will become the principal
theatre of events in the great future of the world ' is destined to-
come true. These Frenchmen tell us that the time is rapidly
approaching when American mastery of the Pacific will spell ruin
for the Old World. Conspicuous among those who hold this-
opinion is M. Jean Izoulet, who discusses the subject of American
supremacy and European decadence in a notable article in the
Paris Figaro.
"M. Izoulet is confident that the supreme revolution upon this
planet of ours — a revolution geographical, commercial and political
— is to be accomplished in this twentieth century. ' The Suer
Canal,* he says, 'gave England an immense advantage. The
Panama Canal will transfer this advantage to the United States
with the certitude that it can never be displaced by a geographic
cause. The United States will attain commercial supremacy on
the Pacific, and this, in the French economist's view, will be the
final supremacy. Bordering on the Pacific are *all of the great
undeveloped and habitable portions of the earth, saving Africa
only — countries capable of incredibly enormous development,
namely. North America, South America, Australia, Siberia, and the
rest. . . . The countries bordering on this ocean are singularly
rich in precious metals, which abound in Australia, the Philippines,.
Japan, Corea and China and on the America side from Alaska to-
Patagonia.' 'The Pacific is, in truth,' declares M. Izoulet, 'the
great sapphire of the world, set in gold and silver.' On the
300 China's Business Methods.
Pacific coast America is to 'build her real facade. San Francisco,
they say, 'is now 3,000 miles from New York.' The time will come
when New York will be 3,000 miles from San Francisco. And across
the Pacific the two giants, Yankee and Slav, will presently find
themselves face to face for the death struggle prophesied sixty
years ago by Palmerston."
Will we win when the earth is shaken by that mighty conflict
foretold by the British statesman and now declared half a century
later by the French seer to be an inevitable phase of the gigantic
world revolution in the twentieth century? M. Izoulet will not
commit himself to any prophecies on this point, but it may be
inferred that he does not think the United States will be over-
whelmed. What he takes no pains to conceal, however, is his
conviction that France ought never to have abandoned the
isthmian canal project, which is the key to the Pacific Ocean, the
"central and final meeting-place of terrestrial civilization." The
confiscation and monopolization of the canal by the United States
may bring about the ruin of Europe. The Old World, evicted
from access to the Pacific save by a precarious passage, will
^'founder and sink." The fact of "the true center and final
meeting place of civilization" will be determined by the United
States and Russia.
Western Nations in China. 301
WESTERN NATIONS IN CHINA.
Great Britain, Russia, France and Ger-
many are now entrenched on the mainland
of China. There are other Western nations
of less commercial importance, but as ambitious
to acquire territory, which manifest an interest
in the policy to be adopted towards China^
while Japan, the first in civilization and in
civil and military reputation of Asiatic nations,,
is fully awake to all current history.
The policy of Great Britain towards China
has been directed on commercial lines and
with the view to promote trade. It has been
a broad policy and open in its invitation to
all other trading nations. Wherever the British
flag has been planted in any part of the
world a better system of government has
been inaugurated and benefits to all have
followed. The traveller sees in every Asiatic
port, open to international commerce, the
beneficial effects of the presence of British
merchants. There is not an open port in
China which, if swept by a fire confined to-
British owned property, would not be
302 China's Business Methods.
despoiled of its beauty and more than half of
its wealth ; and the churches and schools
which are always the result of British
occupation or settlement attest the sterling
<jualities and enlightened manhood of that
branch of the Anglo-Saxon race. Whether this
pacific and civilizing policy is to be changed
by the contentions of other nations for
spheres of influence in China can be best
answered when future developments make plainer
the course that will subserve British interests.
A nation is not required to have its interests
jeopardized by pursuing any policy with a blind
consistency, and it should be expected that aa
enterprising nation like Great Britain, possessing
such valuable rights and interests in China, will
not be found asleep when commercial rivals, and
probably the enemy, show themselves in her path.
Of the nineteen thousand foreigners in China
more than five thousand owe allegiance to the
British flag, and of the eleven hundred mercantile
firms more than four hundred conduct their
business and are protected by that flag, which
shows a superiority in population and mercantile
strength, that has secured for the British flag
about three-fourths of the entire foreign trade
of China. The adverse critics of British policy
in China do not apparently consider accurately
the important interests connected with and
Pacific Ocean — The Arena. 289
appears as the substantial basis for Russian
activity and acquisitions in and from China.
If the whole of Manchuria is the only part
of China that is become Russianized, the
prediction of thoughtful observers of passing
events in China will not be fulfilled, but the
tendency of events point to the absorption of
all North China by Russia, and even that the
capital of China will, ere a few years, be
guarded by Russians.
Viewing the development of Russian
diplomacy, as it bears upon this opinion, a
competent observer says : ** The fact cannot be
too clearly borne in mind that it is only over
a year ago that Russia repudiated the idea of
having any sinister design on Manchuria a&
energetically as she does the intention to
gain political and commercial control between
the Yellow River and the Manchurian frontier
to-day. But Manchuria- is as good as annexed
to the Russian Empire, and the conclusion
is irresistible that the control of all North
China may pass into Russian hands. There is
every reason to assume that, in spite of the
peaceful professions of the Czar, Russian
aggression will pursue its path in China with
the same glazier-like force that has propelled
it from the Caspian to the Gulf of Pechili."
The advantages that will accrue, in the
19
ago China's Business Methods.
extension of Russia's political and commercial
influence by the full completion of the trans-
Siberian railroad, will be incalculable in China
and the Pacific. When completed, the distance
from London to Peking can be travelled in
about fifteen days, and can be made cheaper
than by either the Suez Canal route or the
sea and land journey by way of Canada or the
United States. At present the voyage to
Yokohama by sea, vid the Suez Canal, takes
thirty-four days, and twenty-five by the rail
route. To Shanghai the shortest duration of
the voyage by canal is twenty-eight days, and
by rail thirty-one, and to Hongkong it is
twenty-five days, and thirty-three days by the
isame respective routes allowing for the sea
voyages from Port Arthur to Vladivostock,
which will be the first terminal of the
trans-Siberian line; all the above named points
will be reached in far less time than by any
of the existing routes. When the interior lines
of railway in China are completed and
connected with the Russian road, the steam
routes, except for heavy goods that will not
bear railway freight charges, will be outside
competition. Some approach to the facilities
that will be afforded by the Russian line will
be eventually made by the railway projected
from Constantinople through Asia Minor and
Western Nations in China. 303
dependent on that policy. Not to be circum-
spect would endanger it, but to be rash
Tvould probably entail serious injury, and
Toeing assured in sea power there need
be no apprehensions in awaiting the fullest
developments.
The position of Great Britain in China is
<not easily assailable, and there is no apparent
probable combination that could force her from
lier present position. In the south of China,
the Island of Hongkong is a fortress and a
naval base of great strength and resources, and
the recent acquisition of Wei-hai-wei enables
the British navy to command from that base
the northern seas of China as well as to exert
an influence on the mainland of that part of
the Empire ; and if the valley of the Yangtsze
iRiver should become a British sphere of
influence, then in Central China Great Britain
will control the commerce and mineral resources
of six provinces, measuring an area three times
the area of the British Isles and containing a
population larger than the population of the
United States. The Yangtsze River is one of
the largest rivers in the world and drains
nearly a million square miles of territory as
fertile as any in the world.
At Hongkong and Wei-hai-wei Great Britain
is in peaceful possession, but it is not so
304 Chinas Business Methods.
certain that, should she prefer a claim to the
Yangtsze Valley, it will be as quietly acquiesced
in, for such a claim, in all probability, would
be challenged by more than one of the com-^
peting nations for the trade of China. But if
China is to be reformed and regenerated under
Western influence there can be no doubt, if
the past is any criterion, that the best elements
of civilization would be promoted more rapidly
under the directing influence of the Anglo-Saxon
race.
Great Britain is not only interested in the
future of China, because of the acquisition of
territory and a valuable sea-going commerce,
but Britishers are engaged in important enter-
prises for developing the internal resources of
the Empire. For the construction of railroads
and the opening of mines some very valuable
concessions have been made to British subjects,,
and the work thus far done evidences the skill
and completeness that argues favorably for that
which is to follow. Some of the banks of the
greatest financial strength in China are owned
and supervised by British financiers, and this fact
gives to British trade and enterprise a feeling of
confidence and permanence which have been
potent agencies in securing and enlarging it.
But different towards China has been the
policy of Russia. Heretofore the military
Western Nations in China. 305
instead of the civil arm has been oftener and
with greater potency exercised in influencing
Russian diplomacy, but the building of the
Siberian railroad proves the grandeur of
Russia's plans. It equals in conception any
undertaking of ancient or modern times, and
must prove an influential agency in the
commerce and travel of the world. The
discovery of the passage around the Cape of
Good Hope changed the route of the world's
commerce ; the cutting of the Suez Canal gave
another direction to it ; the completion of the
Panama Canal may change its course again,
but, while the Siberian railroad may have been
conceived and built as a military measure,
yet, the thoughtful should see, in the
ultimate results, a closer bringing together, in
the peaceful marts of business, races which
before knew each other on the field of war
only. Whether it facilitates the annexation of
Manchuria, or will enable the Cossack to water
his horse at an earlier day in Peking, it
would be unjust to deny to Russia the right
to fully protect such an outlet for her
resources and such an inlet into the Russian
Empire for civilization.
It has been written, that the Magna
Charta of Russia in China dates from the
treaty executed at Peking in June i860, and
20
3o6 Chinas Business Methods.
the main provisions of which are "the
cessions to Russia of Lakes Balkash and Issik
Kul in Turkestan ; the appointment of a
commission for the rectification of the frontier
of the Usuri River ; the establishment of
free trade on all common frontiers ; the
concession of the right to trade between
Kiakhta and Peking ; to appoint a Russian
consul at Urga ; the liberty of all Russian
merchants, provided with passports, to trade
throughout China, when they do not congregate
in numbers greater than two hundred ; and
finally, commercial dealings are granted total
indemnity from restriction of any kind."
The treaty of i860, accords substantial
rights to Russia, which have been utilized, and
in 1863, when the Mahommedans of Jungaria
attempted to free themselves from Chinese rule,
and while the rebellion was unsettled, the
Russians marched into Kuldja and occupied the
Valley of the Ibi, and this position was held
until, by the treaty of 1881, the Russian forces
were withdrawn fi-om Ibi in consideration of
China paying a large indemnity and according
to Russia the right of navigation on the rivers
of Manchuria.
From 1 88 1 to 1885, there were no overt
acts on the part of Russia indicating Russian
policy towards China, but Russian surveyors
Western Nations in China. 307
were busy surveying every province of China
and collecting information bearing upon the
resources, government and strategical positions
of the Empire, all of which were carefully
prepared and verified for future reference.
It is now generally believed that the war
between China and Japan presented the occasion
for the renewal of the activity of Russian diplo-
macy, and when, in the treaty of Shimenoseki
which ended that war, China ceded the Liaotung
Peninsula to Japan, Russia promptly availed
herself of the occasion to defeat, by force if
necessary, the provision of the treaty which would
have established Japan on the mainland of China.
In this action on the part of Russia, France
and Germany joined, but it was the voice and
hand of Russia that was first heard and seen^
and while thought by some to have been an
act of friendship in the interest of China, those
who were accustomed to look below the surface
plainly saw Russian diplomacy and not Russian
friendship. Soon after Japan was thus deprived
of the legitimate fruits of her victory over
China, events moved quickly and the rapid
development of Russian diplomacy has given
prominence to the Far Eastern Question.
Under a nominal lease Port Arthur was
delivered to Russia on March 25th, 1898, with
the Liaotung Peninsula, and the previously
3o8 China's Business Methods.
granted railway concessions were extended for
the construction of railways in Manchuria. It
would probably not be a violent expression of
opinion to write, that the lease for the Liaotung
Peninsula and certain rights in Manchuria will
ultimately prove a fee-simple deed to Russia.
The map shows that the Liaotung Peninsula
forms the thin edge of the wedge of Manchuria,
and that Port Arthur is one of the important
seaports, the whole country being bounded by
Russia on two sides and the Mongolian steppe
and Korea on the other, and there are other
strategical positions commanding the territory
indicated, which are occupied by Russian
soldiers, and which are evidences that Russia
has long been maturing the plan for the
diplomatic victory recently and so completely
won. And, whatever may be the impression as
to the justice or injustice of Russian diplomacy,
its depth and strength and perseverance command
admiration even should they fail to excite
commendation.
If Mongolia and Manchuria are to remain
practically Russian possessions, and Chili and
Kansuh are to be added, there will be more
than a million and a half square miles of
Chinese territory under the influence, if not
ownership, of Russia, and territory, the posses-
sion of which, guards the capital of China.
Western Nations in China. 309
No Western nation has made such rapid
and large acquisitions of Chinese territory as
Russia, and the situation of this nation gives
it the dominant influence in the politics of
China. Probably at this time Russia has more
influence in shaping the policy of the Chinese
Empire than all other Western nations, and
this influence may be attributed to the
unfaltering aim of Russian diplomacy.
If France has been correctly understood in
her claim for territory in China, that claim
would comprise the provinces of Kwangsi^
Kwangtung, Kweichow and Yunnan, which
together measure an area of about 350,000
square miles, and as the French sphere in Indo-
China comprises the protectorate of Annam and
Cambodia, the provinces of Tonkin and Cochin
China, there would be the additional area of
315,250 square miles; and France is the second
nation in sea-power, and has as many as
30,000 soldiers in Annam and Tonkin.
The policy of France, as it relates to
territory in Asia, and it may be the same
elsewhere, has fused with the aim of commercial
advantages the ambition for military renown,
with the latter sentiment predominant, but the
lines of railway that France has inaugurated
are pointing towards the provinces, which
Great Britain prefers should be developed by
3IO China^s Business Methods.
British industry, and opposes the idea that the
commercial sentiment will continue to be
subordinated.
The unrest that too often disturbs public
sentiment in France unfortunately neutralizes
the great industry of the French people and
diverts the concentration which would achieve
lasting and beneficial success in industrial fields.
A people as economical and skilled in financial
ability as the French, and as unsurpassed in
energy, merit a settled government, and it is
now evident that business interests are exerting
a decided influence on the French mind and
character and promise the repose which must
convince that the victories of peace are
more lasting than the ephemeral triumphs of
war.
The relations between Germany and China
date from 1861, when the King of Prussia sent
a mission to Peking, and the treaty of Tientsin
was signed. In 1880, a second treaty was
concluded\Hbetween the two nations similar to
the treaty that had been concluded by China
with Great Britain and France. The next
intimation that Germany seriously contemplated
a policy towards China was the speech of the
Germany Foreign Secretary, in the Reichstag in
1896, announcing an understanding with Russia
respecting the future policy of Germany in
Wesiern Nations in China. 311
China, and it was not long after this announce-
ment when Germany made use of the
opportunity to demonstrate what that policy
would be.
In November 1897, two German mission-
aries were killed by robbers in the province of
Shantung, and the consequent negotiations on
the subject between China and Germany
ended in Germany leasing Kiaochau as a naval
base, and thus practically possessing the entire
province of Shantung.
Such was the first advent of Germany on
the mainland of China, and the Imperial
authority exercised over the province, by
virtue of the lease, practically converts it
into a German possession.
There are now in China more than thirteen
hundred German residents, and one hundred
and forty-five business firms of German
nationality, and the trade between Germany and
China is increasing while the territory of Shan-
tung, over which Germany has control, measures
an area of 55,970 square miles. There is no
aspect of this trade or this influence that shows
any weakening, but approximate statistics prove
all to be vigorous and steadily advancing under
the prestige and power of the German Govern-
ment, which is ever present to enlarge and
push it into every conceivable opening.
312 China's Business Methods.
In addition to being entrenched on the
mainland of China, the four nations named
are building railroads and are engaged in other
internal developments of China, until now
their interests are located in nearly every
section of the Empire, thus holding them to
the mainland, not alone by the leases given
by China, but by far greater prospective profits.
If the policy of the four nations be
contrasted, in connection with its apparent
aim towards China, there seems to be more
similarity between that of Great Britain and
Germany, and the policy of France is even
more commercial than Russia's, but, in the
love for real estate and the ambition to acquire
it, there is less diflFerence, although some have
made more rapid and larger acquisitions than
others.
According to Krausse, even in 1896, in the
Empire of China, Russia controlled 462,000 square
miles of territory, with a trade estimated at not
more than ;^2, 800,000 ; Great Britain, 200 square
miles, with a trade of ;^39,20o,ooo ; France,
157,600 square miles, with a trade of ^5,600,000;
Germany, 55,970 square miles, with a trade of
;^2, 700,000. But if Great Britain is to control
the Yangtsze Valley, there would then be added
to the British area 607,000 square miles and a
population of 180,000,000.
Western Nations in China, 315
There are ten treaty ports on the Yangtsze
River and its tributaries now open to foreign
trade, and to which Western nations can send
their ships or locate their merchants, and
whether China would be permitted to grant
control of the territory, in which these ports
are located, to any one nation, is a question
which would probably disturb the harmony of
diplomatic relations. If Great Britain should
acquire the control of the Yangtsze Valley
her position in China would be infinitely
more advantageous than that of any other
nation.
The rapidity with which events are moving
in Asia, and particularly in China, should not
cause surprise if nations, other than those
named, appear on the scene of Chinas
transformation or decay. While the four
named are the largest European nations, there
are others from that part of the world which,
although not so strong in resources, might be
utilized by a powerful rival as a shield behind
which diplomacy could hide its plans or real
meaning.
There is also Japan, with a large resident
population, and with a trade with China,
valued at a few thousand dollars less than
the trade of Great Britain, ambitious and
progressive and fully alive to all the moves
314 China's Business Methods.
being made on the chess-board of the world.
The recent treaty of alliance between Great
Britain and Japan is apparently a peaceful
preserver in Asian lands and seas, and may
prove fortunate in its conception, but a nation,
like an individual, must be self-reliant, in order
to secure and hold the respect or friendship of
other nations. Japan has recognized this fact,
and as I write these words the news comes
that Russia has disclaimed any intention of
annexing Manchuria or closing any part of it
to equal trade opportunities.
But the fact stands out in bold relief that
the sleeping days of China are over, and she
will not be permitted to bar real progress
any longer. The most powerful nations of
Europe hold title-leases to strategical positions
on her mainland, and China will never be able
to compel the surrender of such leases. The
Great Empire, as the result of its sleep for
centuries, has no voice in shaping international
policies. Its wilful refusal to listen, even to
friendly admonition, and to move forward in
self-protection, justifies the withholding of all
manly respect, for, if allowed, China would
turn over and go fast to sleep again. And as
a consequence of the absence of a patriotic
spirit, and a national sentiment which would
prove a bond of unity and strength, the
Western Nations in China. 315
partition of China is still a subject before the
foreign offices of European powers. Whether
the leases or deeds held by Great Britain,
Russia, France and Germany are entering
wedges to a partition, is an open question,
and in this connection it will be of interest
to consider some commercial characteristics
peculiar to the merchants of China.
If China be divided into three grand
commercial sections, the dissimilarities of the
inhabitants of each in taste and commercial
habits appear striking. In the North of China,
comprising the territory of Manchuria, the
social standard of the people is below that of
the people in the Central and Southern parts
of China, but their tastes are towards luxurious
habits and are becoming more so as they
become familiar with foreigners. The exports
from Manchuria are chiefly agricultural, and
that section of China will become a rich
agricultural country when developed, and will
oflFer an unrivalled market for foreign manufac-
turers. The extent of the territory, already
vast, has been increased by reclamations, and
there is much land still awaiting reclamation.
The two most important open ports in the
Northern section are Tientsin and Newchwang,
and it is to these ports that the importations
of the Northern section are entered for
3i6 China's Business Methods.
distribution to the interior markets. The maps
of China and Japan show that this Northern
section lies in close proximity to Japan, and
this may be a main reason why Japan is
watching so closely with intense interest the
advance of Russia in Manchuria. The industrious
and venturesome Japanese merchant has quickly^
appreciated the importance and value of the
Manchurian markets for Japanese manufactures,
and may be expected to cultivate those markets
with all their known zeal. The product of the
looms of Japan, and the sugar of Formosa
will soon be rivals to the products exported
by America and Europe; but American cotton
piece goods are at present the popular articles
of the foreign importations, and their popularity
may be made permanent and the value of the
trade in these articles largely extended and
increased. Japan is not alone interested in
Russian advances in Manchuria. It seriously
concerns American merchants, until some definite
understanding can be had with Russia on the
subject of Russia's policy with reference to
fiscal regulations, for the policy, political and
business, of Northern China is so evidently
becoming the policy of Russia that the govern-
ment of the United States, to safeguard the
prosperous interests of American merchants in
that section, ought not to omit having a most
Western Nations in China. 317
<:arefully worded understanding with Russia on
this important subject.
The Central section of China is along the
sea coast and comprises the territory along the
Yangtsze River. It has wealth and fertility, is
well watered, and is superior in fertility and
productive capacity, and favorable for commerce.
The inhabitants are comparatively wealthy,
^njoy and are fond of luxury, and the merchants
possess great capital ; any combination formed
with the view of controlling prices would be
materially felt in the markets of China. There
is no section of China so favorable to a large
commerce and the prospect of gain as the
territory comprised within this Central section.
The merchants of China in the Central
section are conspicuous for wealth and ability,
and co-operation with the more influential would
doubtless lead to beneficial results in the way
of commercial extension and more intimate
acquaintance with Chinese mercantile life.
In the Southern section, which comprises
Fuhkien, Canton and the adjacent districts,
the Chinese merchants are specially efficient in
their profession, and are quite competent to
maintain their part in any commercial trans-
action. The district in which Canton is situated
is superior in fertility and resources to the
Fuhkien district, and its physical features and
3i8 China's Business Methods.
natural productions invite cultivation and are
capable of great developments.
In commercial integrity the merchants of
China favorably compare with the merchants of
other countries. They are thoughtful of their
obligations, though the prospect of loss is
sometimes a reminder for finding a way for not
complying with their contracts ; and there is a
solidity in the bearing of Chinese merchants that
impresses their superiority over other Asiatic
merchants, and causes less hesitation and
circumspection in dealing with them ; and this
characteristic is worthy of remark to their credit,
when the system of the Chinese government,
in practical administration, tends to cultivate
suspicion and distrust. Under a better system
of Government their merit would be more
favorably known and no agency would be so
potent in developing and making China wealthy
and respected as her mercantile class.
Note. — ^The distinction between the rights acquired by way
of "Protectorate" and those under a "Sphere of Influence" is
thus defined by Hall in his book on International Law : —
"States may acquire rights by way of protectorate over
barbarous or imperfectly civilised countries, which do not amount
to full rights of property or sovereignty, but which are good as
against other civilised states, so as to prevent occupation or
conquest by them, and so as to debar them from maintaining
relations with the protected states or peoples. Protectorates of
this kind differ from colonies in that the protected territoxy is not
Wesiern Nations in China. 319
an integral portion of the territory of Ihe protecting state, and
differ both from colonies and protectorates of the type existing
within the Indian Empire in that the protected community
retains, as of right, all powers of internal sovereignty which
have not been expressly surrendered by treaty, or which are not
needed for the due fulfilment of the external obligations which
the protecting state has directly or implicitly undertaken by the
act of assuming the protectorate.
"International law touches protectorates of this kind by one
side only. The protected states or communities are not subject
to a law of which they never heard; their relations to the
protecting state are not therefore determined by international law.
It steps in so far only as the assumption of the protectorate
affects the protecting country with responsibilities towards the
rest of the civilised states of the world. They are barred, by the
presence of the protecting state, from exacting redress by force for
any wrongs which their subjects may suffer at the hands of the
native rulers or people; that state must consequently be bound
to see that a reasonable measure of security is afforded to foreign
subjects and property within the protected territory, aad to prevent
acts of depredation or hostility being done by its inhabitants.
Correlatively to this responsibility the protecting state must have
rights over foreign subjects enabling it to guard other foreigners,
its own subjects, and the protected natives from harm and wrong
doing.
" The term ' Sphere of Influence ' is one to which no very
definite meaning is as yet attached. Perhaps in its indefiniteness-
consists its international value. It indicates the regions which
geographically are adjacent to, or politically group themselves
naturally with, possessions or protectorates, but which have not
actually been so reduced into control that the minimum of the
powers which are implied in a protectorate can be exercised with>
tolerable regularity. It represents an understanding which enables-
a state to reserve to itself a right of excluding other European
powers from territories that are of importance to it politically as-
affording means of future expansion to its existing dominions or
protectorates, or strategically as preventing civilised neighbors,
from occupying a dominant military position.
320 China's Business Methods.
"The business of a European power within its sphere of
influence is to act as a restraining and directing force. It
endeavours to foster commerce, to secure the safety of traders and
travellers, and without interfering with the native government, or
with native habits or customs, to prepare the way for acceptance
of more organised guidance. No jurisdiction is assumed, no
internal or external sovereign power is taken out of the hands of
the tribal chief; no definite responsibility consequently is incurred.
Foreigners enter the country with knowledge of these circumstances,
and therefore to a great extent at their peril. While then the
European state is morally bound to exercise in their favour such
influence as it has, there is no specific amount of good order,
however small, which it can be expected to secure. The position
of a European power within its sphere of influence being so
vague, the questions suggest themselves whether any exclusive
rights can be acquired as against other civilised countries
through the establishment of a sphere, and in what way its
geographical extent is to be ascertained.
"The answer to both these questions lies in the fact that
the phrase 'Sphere of Influence,' taken by itself, rather implies
a moral claim than a true right. If international agreements are
made with other powers, such as those between Great Britain
and Germany and Italy, the states entering into them are of
course bound to common respect of the limits to which they
have consented; and if treaties are entered into with native
chiefs which, without conveying any of the rights of sovereignty
involved in a protectorate, confer exclusive privileges or give
advantages of a commercial nature, evidence is at least afforded
that influence is existent, and it would be an obviously unfriendly
act within a region where any influence is exercised to try to
supplant the country which had succeeded in establishing its
influence. But agreements only bind the parties to them, and
no such legal results are produced by the unilateral assertion of
a sphere of influence as those which flow from conquest or
cession, or even from the erection of a protectorate. The
understanding that a territory is within a sphere of influence
warns off" friendly powers ; it constitutes no barrier to covert
hostility. The limit of effective political influence is practically
Western Nations in China. 321
the limit of the sphere, if another European state is in waiting
to seize what is not firmly held, and an aggressive state is not
likely to consider itself excluded, until the state exercising
influence is ready, if her legal situation be challenged, to take
upon herself the responsibility of a protectorate. Even as between
an influendng state and powers which are friendly in the full sense
of the words, it has to be remembered that the exercise of influence
is not in its nature a permanent relation between the European,
country and the native tribes; it is assented to as a temporary
phase in the belief, and on the understanding, that within a
reasonable time a more solid form will be imparted to the
civilised authority. It is not likely therefore that an influencing
government will find itself able, for any length of time, to avoid
the adoption of means for securing the safety of foreigners, and
consequently of subjecting the native chiefs to steady influence
and pressure. Duty towards friendly countries, and self-protection
against rival powers, will alike compel a rapid hardening of
control ; and probably before long spheres of influence are destined
to be merged into some unorganised form of protectorate, analogous
to that which exists in the Malay Peninsula."
The nations, having "spheres of influence" in China, are
hardening their control in accordance with the doctrine which
Hall makes clear as a necessary consequence, and the doctrine
is based on the high considerations of duty towards friendly
nations and self-protection against rival powers. The logical
consequence of granting a sphere of influence to a Western nation
does not appear to have ever occurred to Chinese statesmanship,
but they will soon understand its full meaning, for no Western
nation can afford to claim exclusive industrial rights within its
sphere of influence without undertaking the usual safeguards for
the protection of life and property therein, whether of natives or
of residents for business purposes, and such a safeguard the
highest authority on international law gives the nation having the
sphere of influence the right to undertake.
The "Open Door" doctrine, which has been the living subject
of the foreign offices of Western nations for some time, is a doctrine
pertaining to the sovereignty of China, and which China should
maintain in the interest of the fairness of international trade
21
322 China's Business JHethods.
relations. If China wished to open her doors to the trade of all
nations she has granted so many leases and spheres of influence
as to circumscribe much of her territory, and if the grants are
continued the best trading ground in China will be covered by
leases and spheres of influence, which must eventually result in a
division of the Empire. The point has very nearly been reached
where China will not have the ability to either close or open her
•doors, and it is a shameful position for an Empire, so capable
in resources, to occupy before the world.
Policy. 323
POLICY.
In the Lore of Cathay Martin writes
that the modern history of China commences
two centuries before the Christian era, and he
divides it into three periods. "The first,
extending from the epoch of the Punic Wars
to the discovery of the route to the Indies by
the Cape of Good Hope ; the second, compre-
hending three centuries and a half of restricted
commercial intercourse ; 'the third, commencing
with the so-called * Opium War,' 1839, and
<:overing the sixty years of treaty relations.'*
It was during the second period that China
is supposed to have first become aware of the
existence of the principal nations of Europe,
and during that period sustained towards some
of them relations more or less of a treaty or
commercial character.
Anterior to the second period, it would
«eem that China was not aware of the existence
of any Western nations, and had no knowledge
of events transpiring in the Western half of the
world, and did not care to have any information
on the subject.
3«4 China's , Business Methods.
I
The Chinese appear to have been fixed in
the belief that China was the center of the
Universe, and that the nations then known, as
well as such as were unknown, were but
tributaries to the great Central Empire. The
belief was encouraged by the fact that all
neighboring nations .paid tribute to China, and
even the Japanese, when Xavier visited Japan
in the i6th century to introduce the Catholic
faith, objected because an intelligent and
refined nation like China had refused to receive
it. Thus it may be understood how the
superiority over other nations, which China
has so long claimed for herself, could have
originated, and, in addition to the servile
attitude of the neighboring nations, comparison
with them on any lines of culture clearly
proved China's superiority. ^
In addition, China could also claim the
prestige of age. The origin of the Chinese,
and when they came into the world, have never
been satisfactorily settled. They are like the
sources of some great rivers which are so
ancient that their origin has never been
discovered. Confucius could not trace the
annals of his native state Lou beyond the year
722 B.C., but there is recorded in Chinese
history an account of an eclipse which shows
that China was inhabited . and civilized
Policy. 3^5
2155 B.C., while some Chinese scholars ante-date
this last date by a few thousand years as being;
the correct date of the beginning of her ancient
history.
It is known, however, that .China is the
only Empire of Asia whose civilization has
been developed under its own institutions ; whose
government has been modeled without reference
to that of any other ; whose literature has
borrowed nothing from the scholars of other
lands, and whose language is unique in the
antiquity of its system and structure. And the
human race, in its wide and rapid progress,
does not wish to forget that its birthplace was
Asia, and that the wise kings of history sat
upon Asian thrones. / j
What I have written above »-xo indicate,
that China is not wholly without reason for
thinking herself superior to other nations, and
for the policy of exclusion, which she main-
tained so long, and would probably be as
ready to maintain and enforce now if possessing
the power. The admitted superior culture of
China over neighboring nations, and at one
period over all nations, and the servile spirit
in which she was approached by her neighbors
naturally administered to her pride. And China
could not have had much reason to change her
mind when she first made the acquaintance
326 China's Business Methods.
of Western nations, for, as late as i8i6y
Lord Amherst, and the embassy of which he
was the head, were insultingly sent from Tientsin
to Canton in Imperial Chinese boats, with
colors flying, on which were inscribed the
words "tribute bearers,'' and with a letter from
the Emperor of China to the British Prince
Regent in the following words : ** Hereafter
there is no occasion for you to send an
ambassador so far, and be at the trouble of
passing over mountains, and crossing seas, I
therefore sent down my pleasure to expel
these ambassadors, and send them back to
their own country, without punishing the
high crime they had committed."
In 1833 Lord Napier was sent to Canton
as superintendent of British trade, and, under
instructions from Lord Palmerston, was to
announce to the Viceroy of Canton his arrival
at that port, and to ascertain whether it was
practicable to extend trade to other parts of
the Chinese dominions. In answer to Lord
Napier's letter, announcing his arrival as super-
intendent, the following proclamation was issued
by the Viceroy : — ** The lawless foreign slave,
Napier, has issued a notice. We know not how
such a dog of a barbarian of an outside nation
as yours can have the presumption, being an
outside savage superintendent, and a person in
Policy. 327
an oflScial situation, you should have some
knowledge of propriety and law. . . . You
presume to break through the barrier passes,
going out and in at your pleasure, a great
infringement of the rules and prohibitions.
According to the law of the nation the royal
warrant should be required to behead you ; and
openly expose your head to the multitude, as
a terror to perverse dispositions."
Intercourse between the United States and
China commenced in the year 1786. In 1821
it was interrupted at Canton in consequence of
a sailor on board an American ship having, as
was alleged, dropped a pot overboard, by which
a Chinese woman was accidentally killed. The
Chinese judge came on board the American
ship and conducted the trial. The sailor was
condemned and ordered to be put in irons, but
the captain of the ship refused. Afterwards
the sailor is reported to have voluntarily
surrendered himself to the Chinese authorities
and was strangled by their order. The
proclamation published by the Viceroy in
connection with the trial and execution was
in a tone of lofty superiority and arrogance.
In 1844 the United States government
sent an embassy to China under the direction
of Caleb Cushing, for the negotiation of a
treaty between the governments at Washington
328 China's Business Methods.
and Peking similar to the treaty entered into
a few years, previously between China and Great
Britain. Mr. Gushing was received at Ganton
by the representative of Ghina, and apparently
with courtesy. A treaty was entered into
between Ghina and the United States, and
as the Chinese representative was so much
opposed to Mr. Gushing proceeding to Peking,
the latter, in a spirit of conciliation, refrained
from attempting it. But in his report on the
subject, the representative of China assigned,
as the reason why Mr. Gushing should not
proceed to Peking, that the United States had
"never sent tribute." In the report to his
government, with special reference to the
treaty, the following language is used by
the representative : — "The original copy of
the treaty, presented by the said barbarian
envoy, contained forty-seven stipulations,
and the sense of many was so meanly and
coarsely expressed that it was next to
impossible to point them out." There are
other references as discourteous, and which
prove that China assumed that she could insult
with impunity the two great Anglo-Saxon
nations, and they tolerated it for a long time.
I have selected Great Britain and the
United States, because the history of the
relations of these two nations with China is
Policy. 329
representative, and because it is illustrative of
^e haughty spirit of China, which was not
properly met and crushed at the time. Had
China then been held to the strictest account-
ability for her discourteous and insulting attitude,
it is probable that much of the trouble which
has followed would have been avoided. And
it is doubtful if the time has yet come when a
conciliatory or benevolent policy, on the part of
Western nations, will excite either the gratitude
or the confidence of the Chinese government.
A long time after China had become
acquainted with the principal nations of the
West, and had entered into treaty relations
with them, there appeared no diflFerence between
her ancient and modern policy, the haughty
4spirit which distinguished the policy of the
former manifested itself in the latter, and it
was encouraged by the uniform toleration of
Western nations. As late as 1842, commerce
with China was restricted, in the main, to the
port of Canton, where it was hampered by the
most vexatious regulations imposed by the
Chinese authorities at that port, and no one can
surpass the skill of a Chinese official in inter-
posing delays and finding means to embarrass
trade when so inclined.
But at last the Chinese presumed too far
on the patience of the British government. It
330 China's Business Methods.
was when a British ship, with a cargo of
opium, was boarded by the Chinese authorities,,
the opium seized and thrown overboard. Then
resulted what is known as the Opium War, and
the treaty of 1842, when Great Britain, by the
argument of her cannon, convinced China that
it was advisable to open four ports in addition
to Canton, and these were Shanghai, Amoy,.
Foochow and Ningpo, where British subjects
could trade with whatever persons they
pleased, with a consul at each of the ports,
and who became answerable to China for dues
and charges payable by British subjects, thus
abolishing the agency of the hong-merchant.
It was the treaty of 1842 that guided Caleb
Cushing in the treaty he negotiated with
China, and which was soon followed by France
making a similar treaty.
But the lesson impressed on China by
Great Britain was temporary in affecting
China s policy, though it was useful in a
commercial sense, and doubtless for a time
awakened China to the importance of learning
international law and appreciating the duties,
obligations and responsibilities of nations. It
was not, however, until 1858, that the
ministers of Western nations were granted
permission to reside at the capital of China,
and not until 1873 were they allowed to
Policy. 331
present themselves in person to the Emperor.
The first reception ever given by an Empress
of China to the wives of foreign ministers at
Peking was given in 1898, when it was
heralded to the world that China had
abandoned her exclusive policy, politically and
socially, but two years later the gates of her
capital were closed, the minister of Germany
was assassinated, and for two months the
Chinese employed themselves in the attempt
to kill all the other foreign ministers, their
wives and children, and every foreigner in Peking.
It cannot be argued from that attempt at
wholesale murder that China had been a
serious student of international law, or that
foreigners can believe that she has sincerely
changed or modified the policy which so long
excluded them from her shores. Without
the confidence of security, foreign life and
enterprises will have to be guarded and
protected through the agency of Western
soldiers, which can seldom be promotive of
commercial intercourse in the sense to make
it mutually prosperous. And if there are
foreign soldiers in China, it is because the
government of China, when called to account
for the murderous attempt by its subjects at
Peking in 1900, confessed inability at that
time to protect the accredited representatives of
332 China^s Business Methods.
foreign powers at its capital ; and so long as
China is on record as not having the power
to safeguard human life in her capital, or
the railroads and other enterprises, which
foreigners are building and are engaged in
under contracts with China, she should expect
there can be no justly admitted cause for
complaint when Western nations send soldiers
to guard the lives and enterprises of their
citizens or subjects. Let China prove herself
capable of protecting life and property within
her borders, and then she can with reason ask
for the withdrawal of foreign soldiers from her
soil. Such is the advice her best and truest
friends will offer, though it is not the advice
of the flatterer, and unfortunately she has had
too many of the latter.
But it was reserved for Japan to expose
the weakness of China, as never exposed, and
to humble her pride, but the humiliation could
have never been put upon China had she not
remained stubbornly inactive to the warnings
of progress. Of all Asiatic nations, Japan
deserves the credit for breaking down the wall
of conservative isolation which China, more
than another, had built and industriously
endeavored to keep in complete repair. When
Commodore Perry pointed Japan to a new
civilization, with its strength and busy industries,
Policy. 333-
the Island Empire responded, and began the
preparation to receive and utilize it in every way
suitable to her condition. China was also fully
advised, that if she wished or expected to
maintain her position as a nation, and have a
voice in influencing the politics of Asia, it
would be necessary to recognize that Western
civilization knew no receding ebb, and that no
barrier could stop its progress ; but the advice
was unheeded, and in consequence, during the
war between Japan and China, in 1894, China
was ignominiously defeated on every battle-
field and her ships of war fell an easy prey to
Japanese naval prowess.
After the thorough defeat of China, Japan
proved that her aim was not mere conquest
of territory, but, in the main, the speading over
China and all Asia the invigorating influence
of the civilization to which her own success
was so largely due.
No treaty had ever been made with China
with a broader commercial scope, than the
treaty of Shimenoseki, which ended the war,
and which is the record of China's defeat, as
is that of Japan's desire to expand trade. The
treaty secured for foreigners in China the
introduction of modern commercial methods •
it opened the waters of the principal rivers and
canals to foreigners, giving them the right to
334 China^s Business Methods.
purchase goods or produce in the interior of
China, to rent warehouses without payment of
special taxes or exactions, to engage in manufac-
turing industries at the existing treaty ports,
to which several new ones were added, and to
import all kinds of machinery. The commercial
world saw the advantages and there was a
^uick movement in the direction of China,
which continues to gather momentum as the
years go by. No nation of the West, or any-
other section, had ever secured such advantages
in favor of new and enlarged and expanding
<:ommercial intercourse with China as Japan
had secured in the interest of the trading world,
and after achieving such a triumph for free
trade intercourse, the two greatest commercial
nations were silent when Japan was being
forced, by the threat of an overwhelming
physical power, from a position which was hers
by every right of war, and which is now in
the possession of one of those threatening
powers, whose present territorial acquisitions is
the liveliest subject that engages the attention
of the foreign offices of Great Britain and the
United States.
In the treaty of Shimenoseki, China ceded
to Japan the Liaotung Peninsula, but Russia,
France and Germany combined and said to
Japan that the cession should not be eflFective
Policy. >i^uroR!V>- 335
and that the government of Japan should not
remain in possession of that peninsula. In the
face of such a combination Japan was compelled
to yield and accept other compensation from
China, and here appears another feature of the
policy of China, for, when her policy of exclu- .
sion has been forced, she would involve foreign
nations, in the hope of finding a way to escape,
in order to relapse into her usual conservative
grooves. In this particular instance China
succeeded in her invitation to Russia, France
and Germany, an invitation which no doubt was
most readily accepted, and Japan was humiliated
to a certain extent, but that invitation and the
acceptance is now proving somewhat trouble-
some if not disastrous to China.
Could Great Britain and the United States
have foreseen what the forcing of Japan from
the Liaotung Peninsula really meant, would they
have been so silent ? The author of that
move was looking far ahead and Russia is
profiting more by it. The move was successful,
but it is probable that had Great Britain and
the United States spoken distinctly on the
subject, at the time, the Manchurian question
would never have grown into its present propor-
tions, and American and British trade in that
part of China would not be endangered as it
now appears to be.
336 China's Business Methods.
The diplomatic strategy by which Russia
has entrenched herself on the Liaotung Penin-
sula and in Manchuria may be justified by the
necessities of the Russian situation. Russia had
long been in possession of the port of
Vladivostock, which had been chosen as the
terminal of the trans-Siberian line, but the
harbor of Vladivostock is ice bound in
winter and, therefore, with all consequent
disadvantages. It was necessary for that great
line of railway to have a terminal at some port
on the Pacific exempt from all disadvantages
to trade, and in the search for a port, ice
free, the march of events, utilized by the most
skilful diplomacy, placed Russia in possession
of valuable concessions in Manchuria, the port
of the future Dalny, and the fortress of Port
Arthur. The advantages thus acquired by
Russia are within the Chinese Empire and the
government of China ceded them. But now^
when China begins to realize the far-reaching
nature of the cessions made to Russia she
would, to liberate herself, push the United
States, Great Britain and Japan forward to
contest Russias right to be in Manchuria, a
right which China herself has confirmed. And
that is another feature of China's policy.
In this connection the digression will be
pardoned to inquire why Russia has been so
\Policy. ' 337
consistent and persistent in her effort to find
and own proper outlets to the Pacific Ocean,
an inquiry that may be answered by studying
carefully the map of the world and Russians
position. Within the past two centuries there
have been three very important movements
by the Russian Empire. The first was made
by Peter the Great for an outlet to the North
Sea, and was successful; the second, by the
Empress Catherine, for an outlet to the Black
Sea, which was also successful; while the third,
under the present Emperor of Russia, to plant
his flag on the shores of the Pacific, has been
crowned with complete success; and when the
way to the Persian Gulf is made free, thus
completing the outline of the Russian Eniipire,
Russia will have access to the Atlantic, the
Pacific, the Indian Ocean, and the Mediter-
ranean. Besides, between the capital of Russia
and the Pacific Ocean lies Siberia, with an
area nearly twice that of the United States, ,
sparsely populated and undeveloped, and with,
a climate similar to the climate of Minnesota,
and a soil admirably suited for wheslt. Such
a territory, embracing six million square miles,
needs to be populated and developed, but
neither can be successfully done without the
aid of railroads with advantageous terminals*
Russia, too, is fully aware of the value of the
22
33^ Chtna!s Business Methods.
Maochurian markets for cotton goods, and tbat
i5 why the cessions which placed her in that
territory are so aggressively maintained. Russia
holds the fifth place in the cotton spinning
industry of the world, and although the staple
of Russian cotton has heretofore been inferior,,
it has, in recent years, been materially improved
by the American upland variety, which has
thrived finely in Central Asia, The irrigation
plans for the steppes of Asia will reclaim a
still larger area, and with the cotton lands^
developing in Caucasia, it is no random
prediction that Russia will become independent,
if not a competitor, as a cotton growing
country, and, therefore, is more apparent the
reason why Russia intends to control the
markets of Manchuria ; her statesmen are looking
to the future and will be sure to guard the
strategical positions of the present.
When Russia is so rapidly acquiring
possession of the territory of China, and^
giving to her action the proofs of permanent
occupancy, possibly with China's consent, it
would be reasonable if Great Britain, France
and Germany, also in possession of certain
parts of China's mainland, should look to
larger fields than the spheres of influence
which at present circumscribe their supposed
vested rights of industrial operations. And
Policy. 339
should these three nations decide to enlarge
their spheres by the acquisition of additional
territory, as Russia is doing, the area of the
Chinese Empire would soon be materially
curtailed. If the dismemberment of the Empire
should come about, it is likely to begin by
gradual acquisitions under the contention that
when China cedes large areas of her territory
to one nation, ostensibly for the purpose of
constructing railroads through it, but in reality
for the trade advantages of that nation, the other
nations interested in commerce will demand
and enforce whatever remedies may be necessary
to protect and advance their interests.
The policy to play oflf one nation against
another, and in that way preserve peace at
home, can no longer be successfully played by
China. "The old game has played out," for
the relations of European nations towards each
other, politically and commercially, are not
what they formerly were, but China does not
appear to have realized the fact and goes on
blundering, refusing to learn and still wishing
to be let alone. The conservatism which
governs the Empire from Peking is without a
vitalizing element, and discourages the thought
that there may be in China any reserve force
sufficient to rescue her from impending disasters.
The policy of exclusion, which has been the
■ 340 Chtna^s justness Methods.
policy of China during all the centuries, has
ultimately ended in such a condition of
stagnation as to paralyze the energy aujd destroy
the confidence of the people, causing the
Empire to resemble some splendid vessel,
which has become dismantled by the wanton
indifference and carelessness of her commanders,
until she has become the sport of every wave.
What could be more unmanly than for ( a
Prime Minister of China to be engaged in daily
conferences on the subject that some nation or
nations would save China from Russia? And
yet it all has come to that, because China
refused to learn a lesson that Japan learned so
quickly and which has reversed the positions
of those two empires in the world's politics.
To-day Japan is confronting Russia in the
council room of diplomacy, while China, has a
back seat and looks on without the confidence
to assert her rights, awaiting for somethi;ig to
turn up to give her the opportunity of making
some kind of an escape. The Island Empire,
which she so long despised, would have saved
her from the present threatening surroundings
but for the diplomatic blunder committed when
China made it convenient for Russia, France
and Germany to compel Japan to surrender
the Liaotung Peninsula. Since the occupation
of that peninsula by Russia no step has been
Policy. 34E
earnestly and seriously taken to organize
China so that she might protect herself against
encroachments, but, on the other hand, the
aspiration to be in a self-protective state, if it
showed itself, has never matured. Such would
not have been the case had Japan remained
in possession of the peninsula, for a common^
safety would have dictated a common prepara-
tion, and with China thrown open to trade, by
virtue of the Shimenoseki treaty, the confidence
in a mutual safety would have expanded
commerce with all its civilizing agencies. There
would have been no spheres of influence, but
there would have been a larger area opened to
free trade, for Japan, knowing well that the
greatness and wealth of a nation depends more
for development on peace than on war, would
have transplanted and made that idea ruling
in China, whose undeveloped resources is
the favorite theme of the writers on the Far
Eastern Question.
It can be written, without hesitation, that
those Chinese who visit Western nations, and
learn the causes which have made them
strong and enlightened, would not dare, on
their return to China, to go to Peking and
oppose the dense conservatism which governs
to the ruin of their country. In every part
of the Empire the voice of reform invites
34^ China^s Business Methods.
the immediate presence of the public executioner,
and so strong is the sentiment against change
among the conservative classes, that even the
Emperor was dethroned and imprisoned in his
capital because he attempted to break through
the customs and principles which had so long
enslaved his Empire.
No eflFort has yet succeeded in impressing
upon China, that the first and greatest
safeguard of any government is the patriotism
and intelligence of the people, and that in
monarchical governments, the supreme authority
depends for support, and for the prompt
execution of its decrees, more upon the
military arm than any other division, but in
an absolute despotism like China, where the
military arm is weak and even held in
contempt by the ruling classes, there is no
other division on which the supreme authority
can rely, and it becomes helpless to repel
either external or internal attacks ; and, as
explained in another chapter, the supreme
authority in China relies on diflFerent viceroys
whose official and personal interests often
measure their respect for an imperial edict.
At once absolute and helpless, the
Emperor of China consults his provincial
officials as no other absolute ruler would, and,
therefore, without the advantage of any single
Policy. 3f^
.:guiding mind, the Empire is unhinged and
disjointed in its internal structure and practical
administration. The elements of national unity
and strength which hold other nations together,
and preserve the singleness of aim necessary to
national progress, have no place in the
machinery of the Chinese government, but are
actually discarded, and China has governed
herself by moving along, wholly aimless in
aspiration and hope, except to be let alone.
If there could be placed in control of the
civil and military departments of the Chinese
Government, men who would prove as capable
and loyal as Sir Robert Hart has proved
himself to be in the control of the Imperial
Maritime Customs of China, the Empire
might yet be reformed so as to move on the
lines of a new civilization and progress, or
that end might be accomplished by China
throwing herself open, without favor, to all
nations, and with tradal advantages alike to
all, abolishing internal hindrances to trade and
demanding the right and justice to charge a
proper tariflf at her ports of entry.
^44 China^s Business Methods.
THE EMPEROR-
POWER AND RESTRAINTS.
The humblest Chinese illustrates, in family
life, the central theory of the Government of
China. The affection of the father for his
children is the measure of the aflfection of the
Emperor for all Chinese.
Invested with absolute authority by the law^
and served with absolute obedience by the
subject, the same law that makes the Emperor
supreme in power places upon him the necessity
of using that power with moderation and
discretion, and these reciprocal obligations
are the pillars which have for so many ages
supported the fabric of the Chinese monarchy.
The authority of the Emperor extends to
a larger number of people than that of any
other earthly ruler, and the area over which it
is exercised is commensurate with the vastness
of the population.
It is estimated that the eighteen provinces,
which constitute China proper, contain a
population of 350,000,000, and an area of
1,500,000 square miles, and if the dependencies
The EmperoK.^^^^^^ 345.
of China be included, the population is estimated
at 402,680,000, and the area at 4,218,401 square
miles.
This area embraces every variety of climate^
and soil, the former at great extremes at
opposite seasons, and the latter fertile and
rich in minerals.
From the most southern point to the
northern limit of the Empire is about 1,750
miles, and in the South, if the width be
measured along the 24th parallel, from the
Burmese frontier to Amoy, it is about 1,350
miles. The coast line is 2,500 miles, and if the
measurement of the minor indentations and
inlets be added there would be a coast line of
5,000 miles, the equivalent of one mile of
coast to every 300 square miles of area.
Such is the population and area of the
Chinese Empire proper, and all under the
authority and possession of one man, for
the Emperor is not only supreme in making
and executing the laws but he is the owner
of the soil.
The ruler who wields so great a scepter
is held in submissive awe and veneration by his
subjects, his commands carry the authority of
oracles, and all that comes from him is regarded
as sacred. In his presence the highest nobles
speak on bended knees, and on appointed days
34^ China's Business Methods.
assemble in the courts of the palace to acknow-
ledge his supremacy. The want of respectful
adoration and obedience would be a crime on
the part of the subject, as a disregard of the
interests of the subjects by the Emperor would
be a failure of his high mission.
But simple in theory as the central idea
of the government of China appears, the power
that puts it in motion, although supreme, has its
precautions and restraints which are generally
respected.
There are no attributes of sovereignty so
absolute as those which give the sovereign
power over the life and property of the subject,
and there is no sovereign who enjoys these
attributes in so complete a sense as the
Emperor of China.
The judgments of the tribunals before
which offenders against the law are tried are
subject to revision by the Emperor, and no
offender can be executed until the Emperor
approves the sentence of death, but the
judgments of the Emperor, whatever they refer
to, are not the subjects of revision and are
enforced promptly and without being questioned.
He having the full power to appoint all officers
and to dismiss them at pleasure, the agencies
thus employed are not likely to delay in
executing the commands of the authority to
The Emperor. 347
which they owe their office and its tenure ;
seldom are the commands opposed by even the
tnurmur of disapproval.
Acts on the part of the sovereign which,
in some countries, would excite to revolts or
overthrow governments, pass in China without
disturbance, and if the Emperor is generally
equitable in his administration, whatever may
be particularly ill is not allowed to raise
factions against him. The belief that the
general good is being promoted stifles opposition
^nd strengthens the loyalty of the subject.
While exercising the absolute power given
by the laws, the Emperor also has the power,
although the succession is in the male line,
to appoint his successor, and this is another
source from which strength is derived by the
throne, for there is no compulsion to confine
the appointment within the royal family, but
the deserving, in whatever walk of life, may
be selected.
There are examples where the Emperors
have ignored the royal family and the nobility
and appointed their successors from those who,
though humble in birth and fortune, were
eminent for virtue and admirable for under-
standing ; but the appointment is usually con-
fined to the family of the Emperor, but not
50 frequently to his children, and still less
348 ChincCs Business Methods.
frequently to the eldest, for, they say, in
excluding their own children they act for the
good of their kingdom and the honor and
credit of their children, for whom it would be
more glorious to live privately than to sit
upon a throne exposed to the censure, and
oftentimes to the curses, of the people.
"If, they say, a lofty title could create
merit in those who had it not before, we
should indeed injure our children by excluding
them from the crown ; but since it serves only
to punish and spread their defects more abroad,
we think ourselves obliged, by the kindness
and tenderness which we bear to them, to keep
them from that shame and disgrace to which a
crown would ^necessarily expose them."
And there could be no proof more
conclusive of the authority of the Emperor
and obedience to it than the absence of
confusion and disorder at his death, for
notwithstanding the exclusion of those, who by
blood of royalty and nobility, had the right
to expect promotion, ambition does not show
itself and the tranquility of the Empire is not
disturbed.
Should the Emperor make known the
name of his successor before death, he still
has the power to revoke the appointment and
make a new one, or renew the first, but
i UNIVERSITY
The Emperor. ^^i[:l:iL:x->^349
it seems that custom, if not law, require such
action to be supported by good reasons, and
the consent of the sovereign courts at Peking,
^nd the necessity for observing the requirement
is not only not to raise the ** people's tongues
but their hands against the government."
Another proof of , the bond that binds
Chinese in loyalty to their Emperor, is not
lalone what he can do for and with them while
living, but the knowledge that even the grave
cannot put an end to his power over them,
for he can honor or disgrace after death as
well as before ; he can reward or punish them
or their families long after death, and the
^encouragement to loyalty is enforced upon the
head of the family and every member by the
fact that the Emperor can, by a single command,
disgrace or exterminate the whole family for
•the act of any one member, or the virtue of
any one may be the occasion of honor to
all; the safety of the family and respect for
-the dead are powerful and governing motives
of loyalty among a people forming an Empire
formed upon the paternal theory.
The Emperor is as absolute in whatever
pertains to the external relations of the
Empire as he is in the direction of its
internal aflFairs. So long as the honor of the
Empire is regarded he can make treaties , with
350 China's Business Methods.
foreign nations on whatever conditions please
him, or declare war at his option ; but the
condition that qualifies the power to make war
or peace, only when in accord with the honor
of the Empire, is a condition without the
means to enforce compliance except through
the aid of revolution, and there have been
instances of so wanton a disregard for the
interest of the people and their honor that
they have deposed the Emperor thus wanting
in appreciation of the national honor and the
loyalty of his subjects.
Although it is a theory of the Government
of China that all land within the territorial:
limits of the Empire is the property of the
Emperor, there is not, however, a Chinese who
does not enjoy his estate free from molestation
and disturbance. The Emperor, it is true, is
free to impose what taxes he thinks proper
upon his subjects, but this right is rarely
exercised, and there are well defined regulations
for the imposition and collection of taxes. The
consideration manifested for the subject in this
regard is shown nearly every year by exempting
certain provinces from taxation where there
has been sufifering through sickness of the
inhabitants, or the lands, through unseasonable
weather, have not yielded the accustomed
returns. It must be written that taxes in
The Emperor. 351
China are imposed with consideration for the
tax-payer, and that abuses of the power of
taxation by the Central government are excep-
tions, Imt the power is often abused by the
provincial tax collectors.
As if the Chinese desired to surrender
every right that the people of other nations,
revere and cherish, they have given their
Emperor the right to change the figure and
character of their letters, to abolish any
character already received, or to form any
new one. He may likewise change the name
of any province or city, or family, and forbid
the using of any expressions or manner of
speaking; he may forbid the use of some
expressions which have been received or bring
into use and practice those ways of speaking
which have been looked upon as obsolete and
uncouth, and this either in common discourse
or writing. And so it is that custom which is
so unyielding and unalterable an authority,,
especially over the signification of words, an
authority that the scholars of Greece and Rome
failed to subdue, and which those of Europe
and America have not conquered, is humble
in China, and is content to give way when
the Emperor commands.
The unlimited power enjoyed by the
Emperor has sometimes been the cause of
35^ China's Business Methods.
unfortunate events in the Gdvernment, and to
prevent these, the laws provide certain means
which have generally proven successful restraints.
It is not always that power can be neutralized
within conservative limits, but the restraints of
the Chinese system appeal both to the honor
and safety of the Emperor, and place him,
when abusing his authority, in the position of
being insensible to his own reputation and
interest as well as the public good; he
alienates the aflfection of his subjects whenever
lie ceases to be regardful of their interest and
watchful in promoting it.
And it is, therefore, that the paternal
theory, which basis the government of China was
made a maxim, by the old law givers, which was
•ever to confront the Emperor as a warning that
•Whenever he was deficient in the affection for
the people that a father should be proficient
in for his children, the people could not be
expected to remain dutiful and loyal in their
support. This maxim has been the first and
controlling of all others, and impresses itself
by its antiquity and ages of observance, for
there is no higher title of honor or praise
bestowed upon the Emperor by teachers and
philosophers than to call him the father of
the people. However great in war, politics,
or learning the Emperor may be, there is no
The Emperor. 353
title that centers around it, with the same
intensity, the esteem of the people, as to be
commended as their father, and in proportion
as he fails as a father to them his reputation
in their estimation diminishes.
It is often said and written by Chinese
that Western nations have nothing in their
histories, either industrial or scientific, or
relating to the science of government, which
has not been borrowed from China, but it
was not expected to find in the history of a
government intensely absolute, that the right
of petition w^as a fundamental right guaranteed
by custom to the Chinese, and as a means
for the redress of grievances and a restraint
upon the sovereign. In a government, as
absolute in theory as any can be, the right to
petition to the Emperor against grievances is as1
free as in any other government, and the only
condition is that the petition be worded in
respectful language.
When it appears that the Emperor, in his
administration, has departed from the customs
and laws, the petitioner, after pledging his
loyalty, begs that the Emperor will reflect
upon the ancient customs and laws and the
examples of his predecessors, and then proceeds
to note wherein he apprehends they have been
deviated from.
23
^3S4 China^s Busmess Methods.
There is an obligation i upon the Emperor
to read the petition, and Sf there is no change
mthe administration, the. petitioner, if he has the
xeal and courage, may renew the reminder.
There are examples where the persistency
of petitioners has so incensed the Emperor
that he has ordered them to be killed, and
ilthough the order is executed, as are other
orders, without being questioned, such conduct
on the part of the Emperor so shakes the
xionfidence and respect of his subjects, and
honors the character of the petitioner, that
the examples are few. The history of China
proves that the agency of a petition in redress
jbf grievance and settiqg forth wrongs is a
potent means of recalling Emperors from acts
of remissness to a return to duty.
Another restraint against the abuse of the
unlimited power of the Emperor, is the manner
in which his personal history and the history
of his reign is written. It is in this manner :
There are a certain number of men, selected
for their learning and impartiality, whose duty
it is to wTite down daily, with all possible
exactness, both the acts and words of the
Emperor and everything that occurs in his
laidministration. These men have no communica-
tion with each other with reference to their
respective duties, and at the close of the ^j
The Emperor. 355
(each writes on a separate sheet of paper what-
^ever may have come under his observation of
the words and acts of the Emperor, and *'puts
it through a chink into an ofl&ce set apart
for this purpose ; '' the virtues and faults of
the Emperor being recorded with the same
liberality. ''Such a day, say they, the
Emperor's behavior was unreasonable and
intemperate, he spoke after a manner which did
not become his dignity. The punishment which
he inflicted upon a certain officer was rather
the effects of his passion than the result of
his justice. In such an affair he stopped the
sword of justice, and partially abrogated the
sentence passed by the magistrate, or else he
entered courageously into a war for the defense
of his people, and for the maintenance of the
honor of his kingdom. At such a time he made
an honorable peace. He gave such and such
marks of love to his people. Notwithstanding
the commendations given him by his flatterers,
he was not puffed up but behaved himself
modestly, his words were tempered with all the
sweetness and humility possible; which made
him more loved and admired than ever."
That the partiality of these daily histories
shall not be biased by either fear or hope
in the account they giv?, the office into
which the sheets of paper are deposited *is
356 China's Business Methods.
never opened during the life of the Emperor
or while any of his family sit upon the
throne. It is only when the crown goes into
another line that these loose sheets of paper
are gathered together, compared, and from them
is composed the history of the Emperor and
his reign ; and if he has acted with virtue and
wisdom in private and public life, he appears
in the history of his Empire as an example
for posterity, but if negligent of his own
duty and of the good of the people, he is
exposed as the object of common censure and
odium.
The power of the Emperor to honor or
disgrace after death cannot be arbitrarily
exercised without exposing himself to the
disaflfection of his subjects, and the daily record
kept of all he does, and which is published,
substantially, after his death, is an incentive
to lead an upright life, and to administer the
aflFairs of his Empire in the interests of justice,
as the surest way to the loyalty of his subjects
while living and their veneration after death.
The theories of the government of China
are beautiful in their reciprocal obligations,
and the division of the Empire, for practical
purposes of administration, has the approval of
centuries of experience ; and the administration
is entrusted to an official bureaucracy educated
The Emperor. 357
to apply the maxims of government enunciated
before the dawn of the Christian era. But the
trouble with China is that the practice is so
materially different from the theory, and,
although there is an official class educated to
apply the maxims of government, such maxims
are rarely applied intelligently and honorably.
353 China's Business Methods,
OTHER METHODS.
In the treaties of Nertchinsk and
Shimenoseki China touched the extremes of
success and defeat. The former was the
first concluded by China with a Western
power, and by it the Eastern expansion of
Russia, which had been steadily going on for
two hundred years, was suddenly stopped.
By the treaty of Shimenoseki, China was made
to cede a part of her territory to the demands
of Japan, and to otherwise confess the
superiority of an empire she had long despised.
But fortunately for Russia, Peter the Great
assumed the government soon after the signing
of the treaty of Nertchinsk, and since, by
persistent efforts, Russia has recovered what
was lost by that treaty, and in proof of the
success of her policy of Eastern expansion,
now shows the Russian flag on the shores
of the Pacific.
Unfortunately for Japan, and it may be
for civilisation in China, a coalition between
Russia, France and Germany forced the relin-
quishment of the cession of the mainland of
Otbtrf Methods. 355^
Chinese territory, made in the treaty, of
Shimenoseki, and thereby not only violated*
international law, by, threatening to forcibly*
intervene between t<vo < independent empires,
but delayed the reformation of China on the
lines of civilisation which Japan had reforraed,i
and which so soon advanced her to the first
position among OrientaL powers.
There had been a war between Japan and
China, in which Japan was the victor, and
that part of Chinese territory, known as the
Liaotung Peninsula, was legally ceded ta
Japan by the treaty of Shimenoseki, a cession
which Japan had as much right to demand of
China, and China as much right to make, as
Germany, when victor in the war with France,
had to annex Alsace and Loraine and to
hold it as Germany territory.
The coalition between Russia, France and
Germany, which had so arbitrarily deprived
Japan of one of the legitimate results of her
victory, now appears as the first overt act of
a policy to despoil China, and possibly to
conquer Japan ; and if, with the ultimate
addition of Great Britain, which was
never known to forego the opportunity of
acquiring real estate in any part of the world, it
will not require a Columbus to discover that
the partition of China has commenced.
360 China's Business Methods.
Before the first war between China and
Great Britain, which resulted in the opening
of four Chinese ports to foreign trade, Russia
held the privileged position in the trade
of China, and since the date indicated, that
privileged position has passed to Great Britain^
and British merchants still enjoy the larger
share in tonnage and value of the China trade.
But with the close of the nineteenth
century, there is evidence of a more equal
distribution of the trade of China between the
European powers named, and also proof that
Chinese territory will be divided among those
powers before the end of the first quarter of
the twentieth century.
As a consequence of the war between
China and Japan, and the intervention of the
principal powers of Europe, the Eastern
question presented many new and important
aspects ; but the course of events did not
appear to have been fully comprehended by
the nations having the greatest commercial
interest in China. The energy, daring and
comprehensive grasp of Russian diplomacy soon
succeeded in securing for Russia her old time
position, and, in a measure, reversing that of
Great Britain's, for although Great Britain
still enjoys trade ascendency, the influence of
Russian diplomacy is undoubtedly supreme.
Other Methods. 361
And it is somewhat astonishing that Great
Britain should have so easily glided into an
agreement, or tacitly assented, by which Russia
has so completely outdistanced all competitors
and is unrivalled in influence in China to-day.
It is admitted that Great Britain may not have
been able to have altered the course of events
without forming alliances or engaging in war
with the powers forming the coalition ; and it
is further acknowledged that the latter of
these steps should not have been taken unless
threatened with a more imminent danger, but
it is believed that had Great Britain and the
United States seriously opposed interference
with Japan, or the appropriation of Chinese
territory, except in accordance with the law of
nations, the unseemly scramble now going on
for the division of China could have been
averted.
Before the war with China, Japan had
proved herself worthy of the friendly con-^
sideration and respect of Western nations. The
Emperor had surrounded his throne with the
recognized talent of his Empire, and had
remodeled the government of Japan on civilized
lines, and in proof of the merit of the new system,
and the substantial character of the change,
there were the well ordered affairs at home and
the strength and discipline shown in the war
362 China s Business Methods.
with China. There was proof, too, that Japan
was loyal to the new principles incorporated
into her system of government, and knew their
quickening and elevating power, for in the
treaty of Shimenoseki is a provision that China
should no longer prevent the importation of
machinery, but, on the contrary it should be
imported and received at Chinese treaty ports
as other merchandise was received. The most
skilful diplomacy of the West had failed to
win such a victory in favor of the freedom
of commerce, and the manufacturing and other
industrial activities at the treaty ports of China
received their greatest momentum from this
provision of the treaty. If the two Anglo-
Saxon nations could not associate in an alliance
with Japan they might have tried a joint
protest to the aggressive aims of the coalition
in behalf of fair play.
But that lost opportunity to demand just
treatment for a nation which had opened,
wider than ever before, the door of China to
equal mercantile competition, changed again
the aspects of the Eastern question, and that it
was an opportunity lost is now admitted. It
has been pointed out that there was a time
when, had the two Anglo-Saxon nations
counselled in earnest, there would very probably
have been the greatest respect shown, but it
Other Methods. 363
would seem too late to counsel, after the
three great continental powers of Europe have
entrenched themselves on the soil of China, and
Great Britain herself, as reported, has mapped
out the geographical limits of that soil which
^he will claim as hsr share on the day of
the actual partition.
In this real estate business the United
States have not appeared either as a petitioner
•or claimant ; they . have looked on with the
:silence of dignity or contempt. Their relations
with both China and Japan have been and are
now most friendly. China especially entertaining
z. kindly feeling, founded on the belief that
she saw a similarity in their respective policies,
the desire of the United States to be let
alone being evidenced by a high prohibitive
tariff, while that of China was evidenced by
the building of a high wall along her frontier.
The trade between the two nations was
modestly valuable, and the nations of Europe,
when shaping their policies with reference to
■China, and debating the questions which reach
far into the future, did not take into account
the opinion of the United States. It was
often wondered why this great power remained
so negative while possessing unmatched resources
and enjoying the highest state of civilization.
Why the United States stood waiting for some
364 China s Business Methods.
other nation to open the diplomatic door and
then walk in last ? This aspect of the Eastern
question, with special reference to the influence
of the United States, is not overdrawn, and the
past sleepy attitude assigned is warranted.
But all changed when the eff'ective valor
of the American soldier was so signally and
successfully displayed in the war with Spain.
The destruction of the Spanish fleet in the
harbor of Manila revolutionized public sentiment
in Asia, and it was at once recognized that
the United States were indeed a great power.
Statistics showing the area, resources, wealth
and population of the United States frequently
appeared in Asiatic publications, and what
Americans felt and knew before of the
matchless strength and prowess of their coun try
became to be more distinctly admitted by
the foreign and native population of Asia ;.
and it was expected that the United States
would lead where they had so long
followed. It was a reasonable expectation, based
upon both mental and physical ability, and
because of the known American sense of
justice it was wished for by the people of
Asia.
But the success at Manila was neutralized
by the long delay to grasp and utilize results?
and American prestige has consequently suffered
v^ .-.^
Other Methods. ' ' 365
in proportion. The valor of the American
soldier had done all that loyalty and heroism
could do, but the failure of those whose
duty it was to properly utilize results, partly
removed the impression, made by the summary
and brilliant victory over Spain, for the other
impression, that while American valor may be
all that could be desired, American statesman-
ship is slow to comprehend opportunities. And
it is American statesmanship which must solve
the problems of peace and deal with the
questions of commercial ascendency, for into
such a council chamber the soldier does not
enter. The soldier carried the flag to success
in battle, and the statesman must now show
equal competency in his department ; the sword
must not surpass the pen in bearing fame
away. The decided triumph of American arms
is still fresh in memory, but the greater
questions of peace are crowding upon American
statesmanship, and the answer given will
strengthen or weaken the influence of the
United States in the international parliament.
And this is one aspect of the Eastern question
which should earnestly commend itself to the
business men of the United States. The long
delay in adjusting the Philippine question has
not advanced American influence in Asia ; and
it has engaged the attention of the government
366 China's Business Methods,
on that question, to the exclusion of the equally
if not more important subject of promoting
American commercial interest in China.
If another aspect of the Eastern question
be considered, as it bears upon international
law, there are a class of orators and writers
who might reflect, when so persuasive in
argument for the intact preservation of Chinese
territory, whether any other nation would have
the right to object to the leasing or even
ceding of her territory by China as she wished.
The concensus of opinion is that Great Britain
and the United States could have effectively
advised against the so-called leases made by
China to Russia and Germany, but international
law would not have justified the two Anglo-
Saxon nations in going to war to prevent
China from effectuating her agreement with
another sovereign power; and while it is
believed that China was acting under duress
when she leased Port Arthur to Russia, and
Kiaochau to Germany, the fact could not he
assumed, and Great Britain overtly maintains to
the contrary, since she has become one of the
lessees of China, acquiring Wei-hai-wei in
proof of the legality of the transactions.
There is some difficulty in understanding
how the Anglo-Saxon nations would prevent
I the break-up 6f China, or keep the doors df
Other Methods. s^j
commerce open, when one of them has entered
into this leasing business, and is becoming
somewhat more restless in interest in the
prospective delimitation of spheres of influence.
Of the great powers of the world, the
United States have held aloof and refused
participation in the new way of despoiling and
breaking up an old empire, although there is
such seeming modesty in preferring the demands^
for the principle is the same which effaced
Poland, extinguished Hungarian freedom, and
is attempting to blot out the existence of
Manchuria. It is thought, and is still believed,
that if Great Britain and the United States
had entered a firm protest against interference
by the three powers of Continental Europe, in
matters growing out of the China- Japan war, the
centers of Asiatic trade would be free from
apprehensions of impending conflicts, and what-
ever shadows coming events may cast before,
the future would appear to hold too much
prosperity for the United States to depart from
their traditional policy, except in so far as the
movements of the forces of civilization make
clearly intelligent and fully justify. Unexpected
vwars and unlooked for results would doubtless
render a : too close adherence to any cast iron
policy seriously hurtful, but the extreme
..expansionists .are as dangerous to the safety jof
368 Chinas Business Methods.
American institutions, as an adherence that will
not admit of any flexibility is to the expansion
of American business.
The declared purpose of the United States
to educate the Filipinos to the standard of
^elf-government is a declaration that should
not have been published to the world, because
all history teaches that the test now being
made by the races, which have attained the
highest distinction in the art of self-government,
have not escaped civil wars nor been free from
other disorganizing agencies which have
threatened society. It was just to destroy
Spanish oppression, though it was not states-
manship to hold out promises which may
never be fulfilled, but it was statesmanlike to
fortify American commerce in the Pacific
Ocean and in Asiatic lands, and which it was
supposed the acquisition of the islands was
intended to accomplish. But if orderly
government throughout the islands has not been
established under the able and conservative
administration of Governor Taft, the prospect
has almost ceased to be encouraging. The
commercial position of American merchants in
the Philippine Islands should be so influential
and valuable as to bridge the intervening
waters to the mainland of China, otherwise
their position will not prove essentially
Other Methods. 369
promotive of their trade in that Empire. The
Continental nations and Great Britain have
advantageous positions on the mainland of
China for promoting the tradal interests of
their tnerchants, and such positions are being
industriously used for that purpose. True that
the racial characteristics of the natives of the
islands, together with centuries of oppression,
greatly militates against and delays the efficient
working of the machinery of the civil govern-
ment there, but commerce moves with the
agencies best prepared to find new markets
and give remunerative returns ; it does not
wait, but moves on with the nations which
are ready and prepared.
And the Eastern question is becoming
more complicated as it relates to China. Not
only did Russian diplomacy avail itself of
every opportunity resulting from the China-
Japan war to advance Russia's policy, but the
Boxer movement appeared to place China
under new and friendly obligations, and as
a consequence very material and additional
privileges were accorded Russia for building
railroads in Manchuria. At this time Russia is
interlacing the Manchurian division of China with
railroads, which are either completed or in con-
templation of completion, and no open door in
that division need be expected without the
24
370 China^s Business Methods.
consent of Russia, and when it serves her
interest to give her consent.
After China had disgraced herself by the
attempt to kill all the diplomatic representatives
of the foreign powers who, by the most sacred
obligations known to international law, she
should have protected, these same foreign
powers, after the escape of their Ministers^
recognized China as a sovereign nation capable
of entering into treaties and alliances and doing
other acts of a sovereign power.
And one of the other acts has been to
practically cede Manchuria to Russia, for^
after completing her railroad system in
Manchuria, it would not be logical to demand
that Russia abandon Manchuria and allow her
costly improvements to remain in the
uncertain care of China. Besides, the railroads
will develop Manchuria and open up new
markets, and Russia cannot reasonably be
expected to yield to other nations an equal
share of the commercial and political advan-
tages that her energetic efforts and foresight
have brought about. It would seem that
Russian policy has been clearly stated in the
Novoe Vremya as follows : — " After we have
constructed the Chinese Eastern Railway we
cannot play the part of an unconcerned
spectator towards the future fate of this
Other Methods. 371
railway. It has cost us many millions. If
the Manchurian Railway is to serve the
development of Russian trade we must restrict
the commercial freedom of other nations.
The same applies to the question of mining
rights. The necessity of safeguarding the
interest of the Manchurian Railway compels us
to keep a watchful eye on the Shanhai-kwan
and Newchwang line. If this line were to be
carried across the Liao River and connected
with the South Manchurian line, trafl5c would
be deflected from the province of Pechili ta
Shanhai-kwan, and the southern part of our
railway, together with Port Arthur and Dalny,
would lose in importance. This is the reason
why we cannnot allow the Manchurian Railway
-to cross the Liao. Moreover, this railway
runs to the North of the Great Wall ; that is
to say, through our exclusive sphere of
interest. If we neglect to see that the
railway remains absolutely Chinese, the
danger arises that British and Japanese
influence may be established in Southern
Manchuria — in territory exploited by our railway.''
In Greater Russia^ Gerrare thinks that
the alliance between Great Britain and Japan
means the protection of the former's trading
interest in the Yangtsze Valley, while the
latter safeguards Korea, but so far as relates
372 China's Business Methods.
to Russia's operations in the North, Great
Britain has somewhat neutralized her right
to interfere by the agreement with Russia in
1899, by which (Art. i) "Great Britain
engages not to seek for her own account, or
on behalf of British subjects or of others, any
railway concession to the North of the Great
Wall of China, and not to obstruct, directly
or indirectly, applications for railway con-
cessions in that district supported by the
Russian government/' And " Russia (Art. 2),
on her part, engages not to seek for her own
account, or on behalf of Russian subjects or
others, any railway concession in the basin of
the Yangtsze, and not to obstruct, directly or
indirectly, applications for railway concessions
in that region supported by the British
Government."
The first and second articles of the
agreement indicated were entered into by
Great Britain and Russia "by a sincere desire
to avoid in China all conflict or question
where their interests meet." There is also
in the agreement the expression of a like desire
not to *' infringe in any way the sovereign
rights of China," and to '* serve the primordial
interest of China.''
To the common understanding, the two
articles quoted will read very much like that
Other Methods. 373
Great Britain and Russia have agreed as to
each other's sphere of influence, and, though
expressed for business purposes only, it follows
that if Great Britain undertakes to act in the
Yangtsze Valley as Russia is acting in North
China, these business spheres of influence
will soon merge into spheres of territorial
ownership.
If there be a key-move in the political
game now being played by Western nations
for advantages in China, it is Port Arthur,
and Port Arthur is in the possession of
Russia and will not be relinquished as it was
when in the possession of Great Britain ; and
it will be noticed that the railroads Russia
is building in China generally point towards
Peking.
Gerrare well says that '* nowadays an
Empire is neither won nor held by signing
papers, and making treaties is only the way
in which nations mark time. . . . The
Russians give European statesmen treaties to
play with, as they would give glass beads to
savages who want them. Which does the
world count of greater value, a paper signed
with honor in Berlin nor a railroad built
by labor from the sea to Uganda ? What
is the treaty of Berlin ? What is the Bulwer*
Clayton Agreement, and the Chinese railway
374 China's Business Methods.
concessions ? So much waste paper. Batum is
not a free port ; Great Britain has no fortress
in Nicaragua ; nor is the first sod turned in the
railways in the Yangtsze Valley. Statesmanship
which results in such a harvest is unfitted
for the century, so the Anglo-Japanese alliance
must be appraised simply by what it is the
means of actually and materially accomplishing."
Acting in accordance with the above
ideas, in their application to China, Russia has
recognized that the "wars of the future will
be for markets, and that a short railway may
be worth more than a fleet of battleships.*'
Certainly, thus far, the occupation of
Manchuria by Russia has not been injurious
to the development of trade in the three
provinces, and the railroads Russia is building
facilitate the transportation of a steadily
growing commerce. Before the building of the
railroads the native routes could not have been,
according to Hosie, in a worse condition,
and such routes as are still under Chinese
supervision do not improve, the idea being
that as a route becomes more uneven the
framework of the Chinese cart should be made
stronger. When the Japanese occupied Southern
Manchuria, as a result of their war with
China, it was predicted that its commercial
future would be destroyed, but on the contrary
Other Methods. 375
Japan has become a principal market for
Manchurian products.
It is difficult to believe that any change
in the business and political condition of China}
especially the political, could be worse than
it now is, for unless there is a radical change
in the political aspect another lease of life
will be given to that conservatism which has
made China a diplomatic football and which
will set back the civilizing influences now at
work among one-fourth of the population of the
world. And as it is true that an opportunity
was lost at the close of the China- Japan war,
so is it equally true that another was thrown
away at the end of the Boxer movement.
Whether that movement had an official origin
or not, the Government of China either could
not or would not interfere to oppose it, and in
either event Western powers would have been
fully justified in so improving the administration
of China as to render impossible thereafter a
repetition of the barbarism and intended
brutality. Then was the time to have said to
China: — You must have a government that can
prevent such a crime against all humanity,
and, if the present government is unable, we
will reform it, and, if unwilling, we will efface
it. The benevolent policy which was adopted
is dangerous, and the nations which advocated
'376 China's Business Methods.
it may have cause to regret it. No one should
want to be cruel and exacting, but to deal
safely with China the policy should be sternly
just and preventive, and that is the policy
which will be longest remembered and respected
by China.
Shanghai. yj'j
SHANGHAI.
After writing the preceding pages it
occurred to me that an account of the rise
and progress of China's chief commercial
city would make an appropriate chapter,
and under the guidance of an old resident
the attempt is here made to write it. The idea
was pleasant, because during the several years
lived at Shanghai I have felt a pride in the
growth of the city and the industry which has
given it such a commanding position in the
business world.
For such present knowledge of the
port of Shanghai as is common property,
recourse must be had to the records which
have appeared at uncertain times in the various
local newspapers, to sundry missionary and
consular reports, to a few books which treat
of China as a whole, and make but small
pretence of any consideration of what is gener-
ally known as the *' Modern Settlement ; *' but
more particularly to a pamphlet on the earlier
fortunes of the port, by Mr. W. J. Maclellan,
378 China's Business Methods.
in 1889, at that time editor of the North-
China Daily News. Still, from such sources,
and from the lips of those fast disappearing
few, whose memories can with any certitude
go back a jubilee of years, enough can be
gleaned to form the basis of a fairly
consecutive and dependable story.
Short as has been the life of Shanghai,
its sixtieth cycle, coming to its close this very
year, that period has not been wholly without
its stirring incidents. Twice has Shanghai been
under military occupation, twice has it undergone
those vicissitudes apparently inseparable from
the acquisition of landed property by the few
as against the many ; while time and again
has the severity of its trade fluctuations taxed
the resources as well as the recuperative powers
of the *' Republic," yet, in spite of much
recurrent adversity, Shanghai has ever risen
superior to the occasion, and finds herself
more than able to occupy and satisfy all the
conditions of the high position in which she
stands to-day.
For convenience the story of Shanghai
may be treated of under two periods : that
quarter of a century which commenced with
the opening of the port in 1843 and closed
with the most disastrous year of 1866, and the
thirty-five years which have witnessed the
Shanghai. 379
transformations in the place that are at once
the pride and the delight of those whose
privilege it is to be citizens of this unique
Commonwealth .
Rapid as has been the rise and progress
of this treaty port, its development naturally
pales before the growth of the newer cities of
the American Republic, whose very name is
legion ; yet, considering the unaccountable
disadvantages under which it has had to labor,
pre-eminently the fateful, impregnable conser-
vatism of oflScial China, the position of
Shanghai to-day can be held to be but little
less than phenomenal, and fully justifies the
optimistic expressions which are heard on every
hand. It is not as if Shanghai's position had
been secured by fortuitous circumstances. It
has been attained by reason of much ** hard
work," and it would seem to be assured.
Fortunately sound business sense directed its
early history and still governs, and I hope will
ever safeguard its future.
Not without its meed of interest would
be some short topographical survey of the
surroundings of the " Commercial Metropolis
of China." Shanghai is a walled city on the
left bank of the Whangpoo Rivrer, some twelve
miles from the estuary of the Yangtsze. The
name itself implies the fact that it was a
380 China's Business Methods.
place originally on the " Upper Sea," or near
the sea, or in communication with it ; and the
fact that the enormous alluvial plain, now
fertile beyond description, in which the city
is situated, was once under brackish waters
which reached Tsingpoo, thirty miles to the
south-west of Soochow, and washed around
Quinsan as far as the uplands of Chinkiang,
goes somewhat to confirm Shanghai's earlier
association with the sea.
Though known as a trading place so long
ago as B.C. 249, Shanghai came by its name
years before when it was a mere hamlet
occupied by fishermen. At that period, in
fact, there were two hamlets or fishing
villages. The one was called '*Zong-he,*'
upper sea ; the other ** Au-he-pu," or village
of the lower sea. In the latter instance, the
word ** pu,'* shop, would be appended when
shops began to be opened there ; the original
antithesis would only be **Au-he" and *'Zong-
he,'' lower sea and upper sea, and the original
names are still discernable in their latter day
garb of '* Yangtsze-pu *' and *' Shanghai.'*
Five hundred years later the Soochow
Creek, at that time known as the Woosung
River, was of an average width of five miles
between this and Soochow. How different
from the contracted, shallow stream of to-day!
Shanghai. 38 1
Still, in its day, it must have contributed not a
little to the importance of Shanghai as a port.
During the two centuries, 1360 to 1560,
Shanghai was continually subject to raids by
Japanese pirates, whose incursions were even
extended to Chapoo, Ningpo and Hangchow,
and it was only towards the close of the
sixteenth century that the present walls of
Shanghai City were reared as a protection
against the enterprise of the Chrysanthemum
Kingdom.
Further acquaintance with earlier Shanghai
has but little interest until such time as it
became better known to the outside world.
For actual foreign trading purposes Shanghai
was practically unknown until the visit, in 1832,
pf Mr. H. H. Lindsay, a supercargo in the old
East India Company's service, and subsequently
founder of the great house which for years
bore his name. So impressed was this pioneer
with the daily passage past Woosung of 400
merchandize-laden junks, that he reported the
circumstance and the great tradal possibilities
to the British Government. Ten years later,
in 1842, a British fleet under Admiral Sir Wm.
Parker, and a military force of 4,000 men,
under Sir Hugh Gough, captured the Woosung
Forts with 175 guns, and Shanghai with its
ordinance of 407 pieces of cannon.
382 Chinas Business Methods.
A reconnaissance in force up the Yangtsze
resulted in the Treaty of Nanking, by which
the ports of Shanghai, NIngpo, Foochow,
Amoy and Swatow were opened to foreign
trade. On the 17th November 1843, Shanghai,
was formally declared open to foreign trade
by H.B.M's Consul, Captain Balfour, whose
name still lives in the street nomenclature of
the Settlement. He selected as most suitable
for the uses of his nationals that large area
so familiar even to the most recent resident,
bounded on the south-west and north sides by the
Yang-king-pang, Defence and Soochow Creeks,
and limited on the East by the Whangpoo
River. At that time this tract was little less
than a morass, with numerous ponds and creeks,
and the safe haven of countless pheasants.
Without loss of time residential business
houses or hongs began to be erected on the
land which the British Government proposed
originally to acquire, but which afterwards it
was resolved to allow British subjects to
purchase as they required from the Chinese
owners at the modest prices then current,
which ranged, according to Dr. Medhurs^,
from fifteen to thirty dollars per mow. The
lands thus purchased are the finest sites
I in Shanghai, and some of them have but
recently changed hands at over two thousand
Shanghai. 383
times their then value. For two and a
quarter mow with house on the Bund as much
as Mex. $250,000 was given within the past year.
When the first streets were contemplated
there was much haggling as to the width
suggested by H.B.M. Consul, viz.^ twenty-five
feet. The general contention was that half that
width was sufficient for the carriage of tea and
silk. Happily wiser counsels prevailed, and a
compromise was ultimately agreed upon of twenty-
two feet. The first four roads projected were ^
those running East and West, the Canton Road,
replacing an old native ropewalk ; the Foochow
Road ; the Nanking Road, which still shows the
sinuosities of the creek which it supplanted ;
and the Peking Road, which practically was
the margin of the Soochow Creek at that time.
Trade gradually increased, though transactions
in those early years were almost entirely
barter operations, and the influx of foreigners
became annually more marked. But it was
not until 1861 that the foreign trade received
its great impetus by the Treaty of Tientsin,
and a further increase by the throwing open
of Japan.
The first friction with the natives occurred
in 1848. In the March of that year, three
missionary gentlemen. Dr. Medhurst, Dr.
Lockhart and Mr. Muirhead, were ill-treated
384 China's Business Methods.
by a mob of grain junkmen at Tsingpoo.
Failing satisfaction, Mr. Consul Alcock
blockaded Shanghai, and stopped the departure
for the North of 1,100 grain laden junks. This
reprisal had the immediate effect of bringing
the local authorities to their senses. Com-
pensation was paid to the missionaries, and a
smoother time assured for the trader.
In 1848 the French Consul,' M. de
Montigny, opened the French Consulate, and
quickly obtained as a concession the district
lying between the Native City and the Yang-
king-pang Creek. Immediately on this concession
becoming known, Mr. Griswold, the United
States Vice-Consul, who had offended the
British Consul and the Taotai by hoisting his
national Hag within the British Settlement,
protested against the French getting separate
ground for a concession, on the principle that
the grant of exclusive rights and privileges
was one of the very worst features of Chinese
policy. But nothing came of this protest,
though the grant of exclusive privileges is
now proving very dangerous to China, and
Mr. Griswold was not so far wrong in his
advice.
Naturally enough, as roads ' began to be
built and houses to appear, the thoughts of
the early settlers were soon concentrated upon
Shanghau 385
some form of municipal management. Trade^
too, at that time was so rapidly increasing
that a meeting of merchants was called to
devise means to place a tug steamer on the
river, while their anxiety to keep abreast of
the aflFairs of the day brought into existence
Shanghai's first newspaper. This was the
North-China Herald^ whose first number was
issued on the 3rd August of 1850, under the
editorship of Mr. Henry Shearman. That paper,
under its changed name of North-China Daily
News^ with Mr. R. W. Little as its present
editor, still occupies its influential place
among journals published at Shanghai. There
were few banking facilities until the once
celebrated Oriental Banking Corporation entered
the field, which, without any wholesome
competition, exercised a volition in its exchange
methods which rapidly brought great wealth
to the institution. Curious reading would some
such advertisements as the following appear to
us of later times: — **The O. B. C. will draw
«ix months' sight bills on London for the next
mail at 6^. %d, per tael, and will buy merchants'
credits of the same usance at 6^. io</. per
tael," or '^ Mr. Smith will sell drafts on Messrs.
Baring Brothers & Co., London, at six
months' sight at 6^. 9^. per tael." Yet these
were amongst the modes of finance in those
26
386 China's Business Methods.
days. But the great trading medium after all
was the compradore, a man usually of wealth
and good standing, who filled every part in
the economy of business. His it was not
only to bring buyer and seller together, ta
settle all disputes, to find necessary funds, ta
secure his employer against loss, and to work
for his advantage in every possible manner,
but to supply and be responsible for the whole
of the business and domestic menage, deputies^
shroffs and coolies, butlers and boys down
to the meanest servants. The system worked
admirably in the **hong" days, when clean,,
respectable, quietly clad servants lived in
and were never absent from the premises, and
when compradores were men worthy of the
name, and absolutely different from the gener-
ally hungry ^^ counterfeit presentment '' that now
reigns in their stead.
Very early in the existence of the
settlement it became necessary to put '^public
affairs" under municipal guidance, and in 1843
a Committee of Roads and Jetties was formed,,
and a tax levied on imports and exports to
pay the inevitable public expenses of road and
jetty making and draining.
It appears that in 1852, which was a year
of great prosperity when, according to the
North-China Herald^ new buildings of a private
\M/
Shanghai. 387
or commercial character were springing up on
every side, that the revenue of the Committee
of Roads and Jetties was taken at $5,000, and
the expenditure at $8,000. These municipal
operations were undertaken at the end of
nine years' trading here, when the commerce
of the port had reached $4,299,192 in imports
and $10,402,750 in exports. But to the
imports the value of the opium and treasure
has to be added. There are no means of
ascertaining the value of the various articles,
but exchange ruled irregularly high, and the
old Carolus or pillar dollar, the money
medium, was reckoned at a value ranging
from 45. 9^. to 55. \\d.
On the authority of Mr. Maclellan, every
inch a sport, as evidence of the healthy and
active state of business, it was necessary to
postpone the autumn races ; people were too
busy, and would not enter ponies ; a condition
of aifairs which has not occurred again in
Shanghai, nor one likely to recur.
In 1852 the Government of China was
in sore straits, and greatly perturbed by the
threatened rising of one of those multitudinous
secret societies which unfortunately still honey-
comb the Yangtsze Valley. Early the next
year Hangchow was reported captured by the
T*aipings, and on the 7th September, Shanghai
388 Chinas Hustness Methods.
was quietly taken possession of by the Triad
Society. The eflForts of the Triads to join
forces with the victorious T'aipings who had
now taken Nanking, were repudiated by the
latter, and, curiously enough, on theological
gjrounds and because of the use pf opium.
Their one and only common bond of union
was their mutual hatred of the Manchu dynasty.
However the Triads were strong enough and
numerous enough to create disorders both
frequent and grave, and their culminating work
of destruction was the wrecking and pillage
of the Custom House. For seventeen months
was the native city of Shanghai in the hands
of the Triads, though they must have been
in sad lack of leaders when their two most
dependable commanders were emaciated opium
smokers, though reported to be men of capacity
and resolution : one a sort of military officer,
and a certain Chin A-Lin, a mafoo in the
employ of Messrs. Gibb, Livingston & Co.
Naturally there were not wanting those who
took advantage of the absence of a Custom
House. The British Consul, Mr. Rutherford
Alcock, and also the U.S. Vice-Consul,
Mr. Edward Cunningham, a partner in the house
of Russell & Co., notified that merchants must
pay their duties to them, or that promissory
notes or sufficient securities be given, otherwise
Shanghai.
that they would not clear either British or
American ships. But the majority of
merchants expressed the view that, as the
Chinese Government could not fulfil its part /
of the treaty obligations, and could aflFord no /
protection whatever, either to property or \
persons in Shanghai, they were not bound ta
pay duties to it. But the two consuls remained
firm, the British representative contending
that a mere insurrection was powerless ta
abrogate a solemn treaty made between the
Sovereign of Great Britain and China, while
the American Consul took his stand upon ^
Article 2 of the Treaty with the United States,
*4hat citizens must pay duties according to
tariff." In these declarations they received
the strenuous support of Sir George Bonham
and Colonel Marshall, the respective plenipo-
tentiaries. The remaining consuls, however^
were of another way of thinking. The French
Consul said that he would clear the ships of
his nationality without calling for payment of
duties to foreign officials, and the consuls of
other natiojis, who were all merchants, followed
suit. Strange to say their untoward action
ultimately led to the recantation of the
American Consul who, in 1854, notified that
as long as other ships cleared from the port
without paying duties American bottoms:
390 China^s Business Methods.
should be placed on the same footing, and
two American vessels carried away full
cargoes of tea on which no duties had
been paid. {Vide G. C. Schwabe & Co.'s
circular, 13th March 1854.]
This anarchous state of things soon wrought
its own cure, for its continuance was an
impossibility, and on the initiative of the
British, French and American Consuls the
Custom House was placed under foreign
organization, an inspector being chosen by each
of the treaty powers. This arrangement lasted
for a time when Mr. Horatio Nelson Lay, of
the British Consular Service, took up the
reins of management, and laid the foundation,
in 1 86 1, of that great institution now known
as the Inspectorate-General of Foreign Customs.
The depredations of the insurgents drove
nearly all the inhabitants from the city, who
flocked in company with refugees from the
surrounding country into the hinterland of the
Settlement. Foreigners ran up the flimsiest
shanties for their accommodation, and to this
encouragement of the influx of natives may be
clearly traced a prime cause of those disasters
which, in the near future, brought so much
woe upon Shanghai. But not content with
raids upon Chinese property and persons, the
insurgents were emboldened to attacks upon
Shanghai. 391
the settlement, and in many an emeute had
proved themselves superior fighting men to the
Imperialists, though many of their encounters
were but too palpably prearranged aflFairs.
Foreigners were subjected to annoyance alike
from insurgent and imperialist, until at last,
on the 4th April 1854, the Volunteers, under
the command of Mr. Thomas Francis Wade,
years subsequently H.B.M/s Minister at Peking,
and accompanied by some men from
H.B.M/s ships ''Encounter" and ''Grecian," and
the U.S. warsloop "Plymouth,'* marched out to
the old racecourse where they attacked the
Imperialists and dispersed them with much
slaughter. The foreign forces amounted to 300
men all told, who put to complete rout over
10,000 Imperialist Braves. This encounter will
live in Shanghai's story as the " Battle of Muddy
Flat." By the end of the autumn the outlook
in the city was gloomy enough. Nine-tenths
of the inhabitants had fled, and the policy was
discussed of handing it over to the Imperialists^
and transporting the insurgents to Formosa.
But the French now found cause for
interference. Between a wall that had been
built by the Imperialists to separate the
insurgents in the city from the French in
their Concession, it was discovered that the
insurgents had erected a small mudfort. This.
392; China's Business Methods.
gave the French an opportunity they had long^
sought, and on the 9th December fire was
opened upon the City by the French man-of-
war " Colbert. " The next step taken was the
despatch of a letter from the French to the
British Consul complaining that the insurgents
went to and from the British Settlement and
the Native City. Mr. Alcock at once impressed
the necessity of neutrality upon his nationals,
and it would seem that the eflForts of the
British and American Consuls restrained the
French Admiral from further operations against
the insurgents until the 6th January (1855),
when a breach was made in the City walls,
out of which the insurgents emerged and
drove off the Imperialists. In the darkness of
the 1 8th February the insurgents stole away^
and on the same day the City was reoccupied
by the Imperialists. The story of the Triad
movement has dragged itself to disproportionate
length, but the effort has been made to show,
that in a greater degree than is ordinarily,
attributed to them, did the American citizens
of the time bear their share of the troubles
and anxieties of the early days of Shanghai.
The comparative quietness of the next five
years did much to foster trade and improve
the status and general conditions of the
aettlfements, when China was rudely shocked
Shanghai. 393^
by another rebellion which laid waste her fair
provinces of Chekiang, Anwhei, Kiangsi and
Kiangsu, and cost the lives, according to
Sir Robert Hart, of more than a million human
beings. The graphic story of the Rise and
Overthrow of the T'aiping Rebellion will be
found in the pages of The Ever Victorious^
Army, the Life of Chinese Gordon, and
many pamphlets born of the time. A few
of the more salient features of the great
endeavor to overthrow the Manchu dynasty^
will suffice for present purposes.
The capture of Soochow by the T^aipings^
in i860 had driven thousands of terrified
Chinese from thence and from contiguous cities
to take refuge in Shanghai, where the ever alert
foreigner quickly ran up countless six-storeyed
buildings for lease at crushing rates, repeating
in a markedly accentuated degree the ''building
policy'' of half a dozen years before. In 1861
the T'aipings approached Shanghai, and encamped
in force at the well-known hamlet of
Sic-A-Wei, four miles south-west of the City.
The influx of refugees was variously estimated as
from 500,000 to 1,000,000 souls; but anyhow
they arrived in such numbers as to drive up
the price of provisions fourfold, land and
rents an hundredfold. In August of that year
the City was attacked, and the suburbs.
\
394 China's Business Methods.
consequently laid in ruins by the French. In
December the rebels to the number of 100,000
threatened the Settlement. "At the time the
local native authorities were severely pressed
they availed of the services of an American
named Ward who raised a company from a
band of deserters from foreign ships and
rowdies of all nations whom the prospect of
spoil had collected on these shores. They did
good service until Ward was killed when the
command fell upon another American of the
name of Burgevine, who subsequently trans-
ferred his services to the rebels, and ultimately
was shot." The Imperial authorities found it
impossible to restrain these raw and undisciplined
levies, and applied to the British Admiral,
Sir James Hope, for a commander. That
officer was found in Colonel Gordon who, after
a rapid series of victories, restored a quiet
China to the rightful authorities before the
commencement of 1864. So much then for
the two military occupations of Shanghai ; for
the peaceful and orderly garrisoning of the
place in 1890, during the Boxer movement in
the North, can scarcely come under any such
beading.
Long before 1864 the Committee of Roads
and Jetties had assumed the title of the
r Municipal Council, ^and in that year passed
Shanghai. 395
what was considered an unusually extraragant
budget. The landrenters sanctioned an expendi-
ture of Tls. 457,000, or nearly double that of
the previous year. "The Council and the
community believed that the exceptional pros-
perity of the place would not only continue but
increase. Recklessness had now culminated
in Shanghai. The General Hospital and the
Shanghai Club were opened in this year. But
a sad day was now attendant upon Shanghai.
Money had come in ** airily, fairily," but not
to remain. There was a wildness about business
which resulted in unheard of prices for produce.
Extravagant to madness were the cost and
style of living. The effect of the speculative
trading of the previous two or three years was
evidenced by the almost unbroken sequence
of failures amongst the oldest and reputedly
the wealthiest business houses in the place,
who brought down bank after bank in their
train ; and in this connection it may be of
interest to note that there were exactly the
same number of banks at this time, as
there are to-day, viz.^ twelve, but only four
found themselves able to pull through the
crisis.
It was the year when the great house
of Dent & Co., the real rival. of the "princely*'
house of Jardine, Matheson & Co., whose
396 China's Business Methods.
partners had been identified with all the-
stirring events in Canton, before the War of
1841, was compelled to succumb. And the
trouble was not confined to commerce alone,
for innumerable tenantless houses, run up on
land purchased at inordinate prices, brought
their retribution upon the head of the heedless
land buyer.
The commencement of the year 1866
saw Shanghai in the ** Slough of Despond."
Chastened and sobered by the results of
reckless trading, wild land speculations and too
costly living, Shanghai in 1867 turned her
thoughts seriously to the redemption of her errors.
It was evident to all that the old order would
have to change, giving place to new. One of
the first departures was the breaking up of
the old hong messes, and a consequent much
quieter mode of living. People began to
build houses on the cheap land which bordered
the Bubbling Well Road, and to live out of
the Settlement. Merchants began to look at
the other end of a business transaction before
entering upon it, and though the next few
years saw the gradual disappearance of all the
old established American firms, Wetmore^
Cryder & Co,, Augustine Heard & Co.,.
Olyphant & Co., Bull, Purdon & Co., and
subsequently Russell & Co., who werq thought
Shanghai. yyi
to have weathered the storm, still the tendency
ever was to the elimination of the speculative
element in trade by more frequent recourse to
the telegraph for information and for orders.
The old-fashioned compradore ^* went by the
board," and with him that control over servants
and native employees whose loss is so much
regretted and felt to-day. Then gradually
expanded the sound idea, that safety and
success were to be found in the frequent turn
over of capital rather than in great operations.
Until 1866 no house of respectable standing
ever sold other than its own clean paper
against its export transactions. Since that time
documentary bills for both imports and exports
have speedily become the universal custom.
The day of the real merchant had departed,
never to return, a fact emphasized by one of
the leading merchants of the day : ** The old
English merchant has ceased to exist. Our
firm has lasted for two hundred years. The
very best period it had was the ten years
preceding 1874; the ten years from 1874 saw
its collapse. It still does business, but of a
different kind ; the merchant has disappeared
because he is no longer wanted/' These were
the words of Mr. Wm. Rathbone whose
representative in North China, Birley
Worthington & Co., were so prominently and
398 China's Business Methods.
honorably associated for long years in the
trade of this port. [Vide Notes from a Diary.
Grant DuflF, Vol. i, p. 150.]
Any full description of Shanghai, of its
palatial banking and mercantile buildings, its
rural residences, now only too frequently
inhabited by wealthy Chinese, its shipbuilding
yards, its line of docks extending on both sides
of the river for more or less the whole length
of the harbor limits, its cotton mills, silk
filatures, its numberless factories and industries^
its great steamship lines ever busy in the
internal coast and foreign traffic, its pioneer
railway, its waterworks, its arsenal, its volunteer
force, hospitals and nursing home, its many
sporting institutions, its climate, its government,
would be beyond the scope of this short story ;
but attention may be directed to one or two
points of pre-eminent interest. And naturally
enough the Municipal Government of the
Model Settlement is one of commanding
importance, while the following comparison of
the first and of the last Councils reads more
like a fairy tale than anything else.
The first Municipal Council was elected
in 1854, and consisted of seven members. On
the 5th October the senior member was requested
to call a meeting to obtain the consent of
the community to raise a loan for building a
Shanghai. 399.
police barrack. The Superintendent of Police I
was the highest paid Municipal servant with a '
salary of $150 a month, and a daily allowance
of $1 for lodging. On the 26th March 1855^
under the presidency of Mr. Wetmore, a most
popular and prominent American merchant and
estimable gentleman, the Council cut down (he
said Police Superintendent's salary to $100 a
month, but, at the same time, made an
allowance of $25 in consideration of that
official taking care of the roads and acting as
clerk of the Council.
In 1856 the estimated income of the
Council was $18,275, niade up of taxes from
foreigners $3,500, taxes from Chinese $5,400,.
wharfage dues $3,000, and rent from Library
and Billiard Club $375.
In 1863, the proposal was made, and
overwhelmingly carried, that the American
Settlement of Hongkew should be turned over
to the Municipality. It was contended that a
very important principle was involved. Two
Settlements had grown up side by side. One had
gone to work energetically and paid for its own
police, drainage and public works. Its neighbor
had borne no share of the cost of these
advantages, but nevertheless expected that the
landrenters would continue to pay for its
improvements.
400 Chinas Business Methods.
Compare the Municipal Budget for the
present year 1903 with its modest prototype
of 1856.
Ordinary Income.
Tls.
Land tax ^ per cent, on total assessed value of property 266,000
General Muncipal Rate — Foreign Tls. 186,000
Do. Native 321,000
507,000
Wharfage dues 160,000
License fees 299,400
Tls. 1,232,400
Ordinary Expenditure.
Tls.
Police and Gaols 296,795
Health Department 57,885
Engineer's Department 503,050
Secretariat 93,300
Oeneral charges : — Fire Department, Volunteers, Band,
Educational Grants, etc. 228,470
Estimated Surplus... 52,900
Tls. 1.232.400
Extraordinary Income.
To be raised by Debentures, if necessary Tls. 550,000
Extraordinary Expenditure.
Bridges, Bundings, Buildings, Roads, Gardens, etc. Tls. 604,324
To complete the table of the 'expenditure
of public money upon Shanghai must be added
the amount devoted by the French to the
upkeep and improvement of their Concession
Shanghai. 401
which verges upon Tls. 400,000, that is, that
the cost of running the two settlements at
present exceeds ^200,000 sterling per annum.
The trade of China and its general trend
have been treated of in a previous chapter,
but the particular share taken by Shanghai is
worthy of note in every respect. Shanghai
would appear to be but the gainer by the
opening of new ports, and her proportion of
the whole volume of trade actually increases
with the expansion of that volume, despite the
counter attractions of new centers.
The total value of the import and export
trade of all China amounted, in 1902, to the
significant sum of Tls. 653,772,057, of which
Shanghai contributed Tls. 138,775,708, or over
21 per cent. These figures are the sum of the
foreign imports and native exports only, and
consequently represent the whole trade,
exclusive of re-exports of foreign goods to
foreign ports, carried on by vessels under the
supervision of the foreign customs.
The customs revenue for the year 1902
was Tls. 30,007,044, of which Shanghai's con-
tribution was Tls. 10,814,077, or over 36 per
cent. The tonnage dues on shipping aggregated
Tls. 920,911, the sum received in Shanghai was
Tls. 619,765, or over 67 per cent. The total
carrying trade was within a fraction of 54,000,000
26
402 China s Business Methods.
tons, of which Great Britain contributed 50 per
cent, China 17 per cent., Japan 14 per cent.,
Germany 13 per cent., and the remaining
nationalities 6 per cent. between them,.
Shanghai's interest alone was 36,000,000 tons.
Nearly 9,000,000 tons were carried in Chinese
owned vessels, but large as this proportion
undoubtedly is Sir Robert Hart's prediction
of forty years ago, reiterated in his recent
volume. These from the land of Sinim^ that
the whole of the China carrying trade would,,
in a measurable time, be confined to Chinese
craft still seems far remote from fulfilment.
So far then as the facts and figures
adduced go, Shanghai makes good beyond
dispute her claim to be entitled *^the
Commercial Metropolis of China."
So far reaching have been the benefits
extended by the Recreation Fund, so many
institutions — the Lyceum Theatre, the Museum,,
vthe Shanghai Library, the Cricket and Rowing
Clubs, to say nothing of the Shanghai Club
itself — assisted by its loans, and so prevailing is
the absence of knowledge of the origin of this
Trust, that a short explanation may be worthy
of record. This fund was created in 1862
with the proceeds of some forty mow of land
within the circuit of the old Race Course,
now the Lloyd Road^ which, costing twa
Shanghai, 405
years earlier $2,245.75, realized the sum of
Tls. 49,425. With Tls. 12,500 of this amount
the Trustees purchased the interior of the
present race course, consisting of about four
hundred and thirty mow of land, now devoted
to cricket, polo, football and golf grounds,
and general recreation purposes. This Recrea-
tion Fund, though badly managed in its earlier
days, was a free gift to the community, and
represents a value to-day of more than
Tls. 1,000,000. Its liquid funds are still and
will ever be available for the benefit of the
general public.
The climate of Shanghai is admittedly
healthy, and the minor inconvenience of the
summer heat is more than compensated for
by a long and invigorating winter. The death
rate in 1902 was 18.1 per 1,000 foreign
inhabitants, and 30.9 per 1,000 natives, but doubt-
less these figures would read more favorably
were more attention paid to sanitation, and
greater restrictions enforced upon the ubiquitous
jerry builder. What is wanted are more open
spaces, less crowding together of dwelling-
houses, less herding of the inhabitants. Public
bathing accommodation is a want of long standing.
Philanthropy has not yet come forward in this
direction, nor in the matter of a Public
Library or Public Technical Institution ; but
404 China's Business Methods.
it may be that soon the public spirit, which
has ever characterised the inhabitants of
Shanghai, will turn to these important subjects.
The foreign population of Shanghai does
not increase in anything like the ratio that
might reasonably be expected, for the Municipal
estimate for the present year is only 7,600 of
all nationalities. At the same time it seems
anomalous that the Settlement, intended origin-
ally only for foreigners — an intention signally
recognized and confirmed at a ratepayers'
meeting thirty years subsequently — should
contain to-day a native population of 350,000,
dwelling in 41,869 tenements, as against the
11886 domiciles occupied by foreigners. Practi-
cally there are fifty natives to every foreigner
in the place, which certainly does not make for
the improvement of the hygienic conditions of
the Settlement, nor augur favorably for the
foreigners' future. The women who are to
grace and make happy the future homes of
foreigners at Shanghai should not be compelled
to spend their girlhood days or raise their
children near the harems of wealthy Chinese,
who, when they come to reside in the settle-
ment, should be made to leave their domestic
entourages behind.
In educational matters, strange to say,
Shanghai scarcely keeps abreast of the times.
Shanghai, 405
There are only four schools of a public or
charitable nature, and amongst these, but in
most unequal proportions, are divided
Municipal grants to the extent of Tls. 10,000.
Hitherto there has been no test by which
to guage the educational proficiency, generally
admitted to be altogether unworthy of the place.
However there are signs that some such
standard of excellence, as that required by
some of the great universities in their local
examinations, will soon be the test of efficient
schooling here ; and naturally the public educa-
tional grants will in future be assigned to those
institutions in proportion as they are found to
satisfy the requirements of the Universities.
The difficulties of maintaining anything
like proportion in the treatment of the various
fortunes and conditions through which Shanghai
has passed must be obvious enough. There are
those who delight in the account of the early
struggles of the Settlement ; there are those
who prefer to follow the gradual expansion of
its trade ; there are even those who desire a
more up-to-date account of Shanghai than it
is possible, at the moment, to depict. Failure
alone would attend any attempt to satisfy all^
but it is hoped that a sufficiency of interest
has been awakened in the future of Shanghai,
and that their belief will be justified who hold^
4o6 China^s Business Methods.
that in the opening up of the new waterways
in the interior and in the ramification of the
country with railways, both early contingencies,
will be found justification for the Model
Settlement's claim to be considered, commer-
cially, the Empress of the Far East. But it
should ever be remembered that the real
interest of an international port like Shanghai
depends upon the broad and liberal sentiment
which influences the Municipal Government.
Incident of the China-fapan War. 407
INCIDENT OF THE CHINA- JAPAN WAR.
In order to make the subject of this
chapter intelligible it will be necessary to
substantially repeat the principle discussed in
the chapter on extra-territoriality, but I believe
it will be more acceptable to preface this
subject with a brief repetition than to ask the
reader to read that chapter before undertaking
this.
By virtue of the treaties between China
and Western nations the citizens of the
latter have the right to reside in the former
without being amenable to the laws of China.
Although the citizen of a Western nation
leaves his home and goes to China to reside
or engage in business he is not amenable to
Chinese law, but continues under the jurisdiction
and subject to the laws of his own country, and
can be tried only by a diplomatic or consular
officer of his country, accredited to China, for
any oflfense he may commit while in China.
If there be no such diplomatic or consular
officer, the citizen so oflfending is tried by a
Mixed Court, sitting at a treaty port, and in
4o8 China's Business Methods.
which some diplomatic or consular officer
presides with a Chinese official. Under no
circumstances are foreigners in China tried for
any oflfense by a Court constituted solely of
Chinese officials.
And, as is sometimes the case, a foreign
nation may not have any treaty relations with
China, but, with the assent of China, confides
its interest and the interests of its citizens in
China, to the representative of some nation
having a treaty, and in such a case, the interests
thus confided can be safeguarded under the
provisions of the treaty of that nation ; but
in the event that the nation, having no treaty
with China, and having failed to make the
arrangement for safeguarding its citizens, as
indicated, the interest of the citizen, which
has been so neglected, must still be adjudicated
by a Mixed Court and not solely by Chinese
officials. By treaty, and local regulations at
the treaty ports, China has long assented that
the interests of foreigners, without diplomatic
or consular representatives, be so adjudicated.
Such a practice at the port of Shanghai
has always been successfully insisted upon, and
for the rules and regulations which are to be
observed, the reader is referred to the chapter
on extra-territoriality, where he will find them
quoted in full. The principle is, that no
Incident of the China-fapan War. 409.
resident of a foreign settlement, whether
foreigner or Chinese, can be arrested by the
Chinese authorities without the knowledge and
approval of the foreign authorities of the
settlement, and it is to this principle, which
safeguards the person and property of foreigners,
that Shanghai owes much of its prosperity.
It will do to repeat, that a foreigner,
living at Shanghai, is as free from the
jurisdiction of China as if he lived in his own
country ; no complaint against him can be
heard or determined except by his consular
representative, and, when a foreigner complains
against a subject of China, he is further
protected by having a consular officer of
his own country present at the hearing and
determination of that complaint. So much for
extra-territoriality.
When war was declared between China
and Japan, in 1894, there were large numbers
of Chinese in Japan and Japanese in China,.
i owning and representing valuable interests, and
I the United States were requested by both
I China and Japan to undertake, through their
diplomatic and consular officers in the territories
of the belligerents, to protect the interests of
their respective subjects. The United States
assented, and the Secretary of State instructed
the ministers to China and Japan to protect
4IO China's Business Methods.
Japanese and Chinese interests according to
international law ; the same instructions were
afterwards sent by the ministers to the consular
officers of the United States in Japan and
China, and it was published to the world that
such interests had been confided to the
protection of the United States.
Several months after the declaration of
war, the Chinese authorities at Shanghai
complained to the French authorities that there
were two Japanese in the French Concession
suspected of being spies, and requested that
they be arrested. It has been seen that the
Chinese authorities could not make any arrest
in a foreign settlement, but the Chinese
authorities knew that Japanese interests at
Shanghai were under the protection of the
Consul-General of the United States at
Shanghai, to whom, they also well knew, the
complaint should have been made, and not
to the French authorities.
The Consul-General for France also knew
that the Consul-General of the United States
was entrusted with the protection of Japanese,
and no arrest should have been allowed by
bim, or, if made by the French police without
his knowledge, it should have been repudiated,
and the complaint of China referred to his
^colleague, who could then have proceeded
Incident of the China- /apan War. 411
according to the regulations provided for
the govemnient of the City and to his own
instructions.
But this obvious course was unintentionally
overlooked by the Consul-General for France,
and the two Japanese were arrested by the
French police, confined in the French police
prison about twenty-four hours, searched, and
all eflFects taken from them.
It was not until late in the afternoon of the
day following the arrest, that the Consul-
General of the United States was informed of
the complaint or of the arrest, and the first
knowledge he had of either was the presence
of the French Consul-General in his Consulate-
General with the two Japanese in the custody
of a French police guard.
It will be evident to one who understands
the peculiar government of Shanghai that,
under the circumstances, the complaint of
China should have been referred to the United
States Consul-General, who could then have
applied to the French Consul-General for such
assistance as the case might warrant in accord-
ance with the recognized rules of procedure
between the two settlements. Even the exclusive
rights claimed for the French Concession did
not justify the arrest, imprisonment and the
searching of the two Japanese whose alleged
412 Chinas Business Methods.
oflfense the French Consular Court had no
jurisdiction over whatever, and no authority to
either hear, try, condemn, or acquit. The
French Consul-General had no jurisdiction, in
any sense, over the subject matter, and, by the
act of arrest, imprisonment and search, the
case came to the Consul-General of the United
States complicated and embarrassed.
The strictly legal aspects of the case^
however, presented no difficulties, nor did the
regulations leave any doubt as to the proper
course to follow. Although the United States
Consul-General had been instructed to protect
Japanese interests at the port of Shanghai, he
was well aware that the instructions did not
invest him with the judicial power to hear and
determine complaints made against Japanese,,
as he would have had the power to do if the
complaints had been made against citizens of
the United States ; and it was equally clear,
that, when China complained against Japanese
the tribunal to hear the complaint, in the first
instance, was the Mixed Court of the Inter-
national Settlement, the Court in which a
Consular Officer of the United States presided
with a Chinese official whenever the subject of
investigation was connected with any interest
about which the United States Consulate-
General may have been concerned.
cRS
Incident of the China- Japan Witi\ 413
And the French Consul-General was so
informed as to what was considered the legal
bearing of the case, and, further, that the
Consulate-General of the United States could
not be made an asylum for Japanese charged
with oflfenses against China. And therefore the
issue presented at this stage was : should the
Consul-General of the United States have
refused to receive the two Japanese and not have
protected them, until the charge made by China
could be formulated before the proper tribunal
for preliminary investigation, or should he have
received them and secured for them a fair
hearing before the established judicial tribunal
holding its sessions in the settlement where his
Consulate-General was situated ? To have
refused to receive the two Japanese would have
been equivalent to undertaking not to protect
them, after being published as their protector,
and then, when the trouble came, to
evade his duty by sending the two Japanese
away from the Consulate-General, or shifting
on the French Consul-General the responsibility
for their safety and a fair trial. The latter was
inadmissable, because cowardly, and the Consul-
General of the United States would not be
a party to it ; he would not undertake to
protect an interest and, when that interest was
endangered, shirk the duty it was his to face.
414 China's Business Methods.
The situation was fully explained to the
two Japanese and they elected, of their own
free will, to remain in the Consulate-General
of the United States until their case could be
reported and acted upon by the nations interested.
There was no asylum given to them in the
sense of concealing or shielding from China:
two men against whom she had complained.
There were prominent Japanese in Shanghai
at the time, and one happened to be in the
Consulate-General when the two accused were
brought there, and it was fully understood by
all that nothing would be done until instructions
had been received from the Government of
the United States ; but the consequent delay
would not have been necessary had the French
Consul-General kept out of the case, for then
the accused would have been sent to the
Mixed Court for a preliminary hearing. The
thoughtless intervention of the French official^
the arrest, the search, the imprisonment, all
became immediately known to China, and^
before any report could be made to the United
States Minister at Peking, China demanded of
the Secretary of State that the two Japanese
should be delivered to her representative at
Shanghai.
But the Consul-General reported all the
circumstances to the United States Legation
Incident of the China- Japan War. 415
at Peking, and also cabled to the Secretary
of State, and specially directed attention ta
the peculiar government of Shanghai and the
importance of respecting the jurisdiction of the
courts and the custom of the port. From the
Legation there went to the Secretary of State
cablegrams substantially supporting the view of
the Consul-General, but the Secretary of State
seemed to be influenced by the idea that China
was an autonomous nation like Great Britain,
France or Germany, and that the principles
of international law applied to China as
applied to those nations. And therein was his
mistake.
The incident occurring in England, or
France, or Germany would have justified
consideration from an entirely different point
of view than when occurring in China. The
European nations named enjoy complete and
absolute autonomy ; their laws extend over all
in their respective territories, and an alien or
native committing an offense therein is amenable
thereto and to the jurisdiction of British or
French or German courts, and yet, during
the Franco-German war, the United States
Minister at Paris, instructed to protect German
interests, received Germans accused of offenses,
until proper arrangements could be made for
their trial, and France made no objection to a
41 6 Chinas Business Methods.
precaution that did not deny the application
and force of French laws, but was based upon
humane principles recognized by all civilized
nations.
But in China the incident presented
materially diflferent considerations, made more
material on account of its locality, for China
did not enjoy complete and absolute autonomy,
because foreigners residing in China were in no
sense amenable to the laws of China or the
jurisdiction of Chinese Courts ; and at the port
of Shanghai, where the incident occurred, even
a Chinese subject, residing in a foreign
settlement, could not be tried in a Court
composed solely of Chinese ofl&cials.
At the declaration of war, the Japanese
in China were not amenable to Chinese law
or the jurisdiction of Chinese courts ; they
could not be arrested, except by the warrant
of a Japanese consular officer, and could only
be tried by such consular officer, and in
undertaking the protection of Japanese interests
in China, although the treaty between China
and Japan was abrogated by the declaration
of war, it logically follows that China could
not demand more absolute and exclusive rights
and powers over an interest, which she had
consented should be confided to the protection
of a friendly nation, than she had over that
Incident of the China-^apan War. 417
interest at the time it was so confided ; and
in this view there is full justice to China.
Besides, the courts of China have never
been recognized by Western nations as organized
and administered upon well defined principles
of law and humanity. The right to torture
the accused is legalized by Chinese law and
practiced by Chinese courts, and a greater
precaution was enjoined upon the United
States, especially when China and Japan were
at war, and the most savage barbarity was
being practiced upon the dead soldiers of Japan
and her living prisoners captured by China.
It is true the Secretary of State consulted
the Japanese Legation at Washington, and was
answered that Japanese claimed exclusive and
sole jurisdiction over Chinese residing in
Japan, but the autonomy of Japan was no
more complete than that of China, and
foreigners residing in Japan were no more
amenable to Japanese law and the jurisdiction
of Japanese courts than they would have been
if residing in China, and when undertaking the
delicate responsibility of protecting the subjects
of two Asiatic Empires engaged in a bitter
war, neither of which were recognized as
civilized and sovereign by the United States,
there evidently should have been a clear
understanding with them how that protection
27
4i8 China's Business Methods,
was to be exercised, or if such an understandings
was deemed unnecessary, then it should have
been exercised according to the rules of
international law and humanity, as agreed to
by civilized nations, and not according to the
views of two Empires not recognized as either
civilized or autonomous.
The Consul-General was fully within the
scope of his instructions when he received the
two Japanese, as he did, for the purpose of
protecting them, until the charges made by
China had been properly formulated and a fair
and open examination arranged for. International
law justified such precaution for such a purpose,
and, in China, strongly warranted it, and the
claims of humanity made it imperative.
There were more than a thousand Japanese
at Shanghai at the time of this incident, and,
had the two Japanese been driven from the
United States Consulate-General, Japanese life
and property would have been in great peril.
Had China known that she had only to prefer
an accusation to get possession of the body of
the accused, there would have been little safety
for Japanese residing in China ; and this opinion
is not speculative, for in a subjoined note
there will be found the printed proclamatioi>
of the highest Chinese official then at the
port of Shanghai, oflfering rewards for Japanese
Incident of the China- Japan War. 419
heads, and when it was known that the United
States meant to extend a paper protection
only, the Chinese oflScials at Shanghai became
unusually busy in their attempt to have
Japanese arrested. One even visited the
'Consulate-General to learn the name of the
prominent Japanese present when the two
accused Japanese were brought to the
Consulate-General by the French police, but
his impertinent insolence was seen and
rebuked.
The protection, which the United States
Government interpreted as proper to extend,,
placed Japanese in a more dangerous position
than they would have been if their interest
had been left to the protection of the Civil
Government of Shanghai, for in the latter
alternative the machinery for the arrest and
trial would have been simplified, as their status
would have been that of other foreigners
residing in the port of Shanghai without
consular representation. But when placed
under the protection of the United States the
civil authorities of Shanghai could not so well
interfere ; and when it became known that
China had only to complain that a Japanese was
a spy, and the United States Government
would simply oflfer its good and benevolent
offices, all the Japanese at Shanghai, about
420 China!s Business Methods.
one thousand, left in a hurry for Japan, and
very prudently too.
And the danger of remaining at Shanghai
was made more apparent when the fact was
published that, upon the complaint of the
Chinese Minister in Washington, there were
two Japanese, alleged to be spies at Shanghai,
and his government wanted possession of them,
the Secretary of State cabled the United
States Legation at Peking to deliver the two
Japanese to China, and that cablegram was
telegraphed by the Legation to the Consul-
General, and when the Consul-General protested
against such a course the Secretary promptly
overruled the protest and repeated his positive
instructions to deliver. If protection did not
involve the exercise of a judicial function, as
interpreted by the Secretary, then why did
the Secretary exercise such a function by
ordering delivery ? The status quo could
have been restored by sending the two
Japanese to the French Concession where
they had been irregularly arrested and
leaving them there to be regularly proceeded
against. That at least would have been more
consistent.
The following letter from the Consul-
General to the Secretary of State proves that
his duties were not misapprehended, and that
Incident of the China- J^apan War. 421
the principles of international law, as applicable
to China, were correctly understood.
Consulate-General of the United States,
Shanghai, China, August 21st, 1894.
Sir,
I have the honor to report that on the 2nd, I received
from the Legation at Peking a telegram of the ist, informing
me of the declaration of war between China and Japan, with
instructions that the United States had undertaken the
protection of Japanese interest in China.
On the same day the Japanese Consul-General at this port
addressed to me an official communication on the subject, and
requested one of my flags to fly from his consular pole. He
communicated to me that the request was made under instructions
from his Minister at Tokyo, Mr. Mutsu.
The wires from Shanghai to Peking had stopped working,
and it required about ten days for a letter to reach Peking, and
this denied me the instructions of the Legation for the time,
and I answered without instructions.
I informed the Japanese Consul-General that, upon general
principles, I did not understand that the functions of his office
would be continued in me, that I could not, in the absence of
special instructions, assume to exercise any of his consular
functions, for they ended with the declaration of war, and
that the use of my flag, as proposed, could not be granted, for
it might have the tendency of an unfriendly import to China.
He then asked me what I conceived to be the character of
the new duties devolved upon me.
I replied that such of his countrymen as desired to remain
in China to pursue their peaceful business vocations would be
protected by my government, and if molested that I would
feel it my duty to promptly bring the matter to the attention
of the Chinese Government, and if charged with an off"ense, to
intervene to the extent of having the charge intelligently made
before the proper court.
422 China! s Business Methods.
He asked me if his countrymen in China were under
American law : I answered that they were not under American
law as an American citizen would be, nor could Japanese be
tried in the court of this Consulate-General.
Respectfully yours,
T. R. JERNIGAN,
Consul-General.
The above letter is clear as to what the
Consul-General considered to be the scope of
his duties under the instructions that the
United States had undertaken the protection
of Japanese interest in China. It is certain
that he did not understand that he \vas to
exercise functions of a judicial character, or
the functions of the Japanese Consul-General,
and which were never exercised, but he did
understand that he was not to wholly ignore
an interest confided to his protection, and that
he did not propose to do, so far as he was
left free to act by his superior officers.
On the same subject, and in explanation
of the action of the Consul-General and the
Legation in connection with the two accused
Japanese, the Secretary received the following
letter from the Legation :
Legation of the United States,
Peking, September ist, 1894.
Sir,
I have the honor to confirm your telegram of the 31st
ultimo as follows : *' Your telegram of this date received. My
instructions of 29th clear."
Incident of the China- J^apan War. 423
Immediately upon the receipt of this telegram I wired the
Consul-General to deliver the alleged Japanese spies held by
him to the Taotai, and I notified the Yamen that this had been
done The Consul-General has not acted in this
matter under a misapprehension of his authority. Neither he
nor I imagine that lending good offices invest Japanese in
China with extra-territoriality, nor that the Legation or the
consuls have the right to shield Japanese who commit crimes. No
attempt has been made to harbor Japanese in other parts of
China, though many occasions for doing so have presented
themselves. The case of the two Japanese arrested at Shanghai
is an exceptional one. On two grounds I felt justified in asking
your instructions.
In the first place, the exclusive jurisdiction of the Chinese
authorities over subjects of a power at war with China resident
in the foreign settlement at Shanghai is sufficiently in doubt
to justify the foreign authorities in demanding proof of guilt
and stipulating for a fair trial before giving up such subjects
when accused. The custom in tinie of peace is for foreigners
residing at Shanghai, subjects of a power having no treaty with
China and hence not enjoying the privileges of extra-territoriality,
to be tried, when arrested for crime, by the " Mixed Court,"
that is with a Chinese magistrate sitting with a foreign "Assessor"
on the French Concession. This assessor is always a French
consular officer. On the Anglo-American settlement an
English assessor sits with the Chinese official on Mondays,
Wednesdays and Fridays : an American assessor on Tuesdays
and Thursdays, and a German assessor on Saturdays. Before
this tribunal are brought all Chinese charged with crimes and
misdemeanors in the settlement, and all foreigners so charged
not protected by treaty. They are heard and their punishment
determined by the Chinese and foreign officials acting together.
The foreigners at Shanghai wished to establish the principle
that this procedure shall be followed in time of war against
subjects of a belligerent power. They are strongly averse to
establishing the precedent that China shall have exclusive
jurisdiction over such persons. This aversion is based on a
desire to preserve the neutrality of the settlement and on an
424 China's Business Methods.
abhorrence of the cruelty of Chinese criminal procedure. They
justly argue that if Japanese are allowed to be taken from the
concession and dealt with at the will of China, then, in case of
war between the United States and China, Americans may be
similarly treated. So far as any precedent already exists, it
is adverse to such right of China. During the Franco-Chinese
war Russia used her good offices for the protection of the
French in China, and French subjects arrested at Shanghai were
actually brought before the Russian Consul for hearing, China
made no effort to interfere with them in any way.
The second reason for which deliberation and caution
seemed justified was based upon humanity. The two Japanese
seized at Shanghai are school-boys. For three years they have
resided in the French Concession peacefully and openly. They
give the name of the school, the teacher, and the place of their
residence, with a minuteness which raises doubts in their favor.
They are probably innocent. The Chinese authorities assert
that their wearing the Chinese costume is a proof of guilt.
To this it is only necessary to reply that they have been
wearing it for years. Japanese clad as Chinese have been
living all over the Empire : I have met them in Peking.
Though contrary to treaty, no objection has been made thereto.
To give these boys up unconditionally is generally believed
to be to give them up to death. The Viceroy of Nanking has,
I am informed, already demanded of the Taotai of Shanghai
why the heads of the spies have not been sent to him. They
are judged and condemned in advance. The Governor of
Formosa has posted a proclamation offering prizes for Japanese
heads. In a country where such a thing is possible it is
needless to inquire what chance a Japanese, accused as a spy,^
would have for his life.
Respectfully yours,
CHARLES DENBY, Jr.,
Charge d' Affaires, ad interim.
In the above letter Mr. Denby reviewed
the situation and pointed out the dangers
Incident of the China-yapan War, 425:
most clearly, forcibly, and conclusively ; but the
two Japanese had been surrendered against the
representations of both the Legation and the
Consulate-General, . and the result proved that
their warnings were well grounded, for soon^
after the Viceroy of Nanking got possession^
of the two Japanese they were decapitated.
In reviewing the incident there is no
intention whatever to be critical, but rather to
state the facts as viewed by one residing at
Shanghai. Unless the Secretary of State had
visited Shanghai, and carefully acquainted
himself with the form of government peculiar
to the City, he would naturally have difl&culty
in understanding why public sentiment at
Shanghai so strongly protested against his
positive instructions in regard to the accused
Japanese. The Secretary acted as he would
have been justified and warranted in acting if
the incident had occurred in England, or some
other country having full autonomy, but no
nation that has a treaty with China recognizes
China as an autonomous nation, and the foreign
and diplomatic and consular bodies in China
had long ago framed special rules for the
government of the port and city of Shanghai,,
the enforcement of which are deemed absolutely
essential to the safety of life and property,,
and, consequently, the prosperity of the city.
426 China's Business Methods.
Besides the doctrine of extra-territoriality,
so strenuously insisted upon, the city and port
of Shanghai were declared a neutral zone by
both China and Japan soon after the declaration
of war between them, and this fact accentuates
the soundness in international law of the
position herein presented as correct.
The record, however, shows that before
ordering the delivery to China of the two
Japanese, the Secretary communicated on
the subject with the Japanese Legation in
Washington and received the following
statement : —
statement of Japanese Legation^ September ^th, i8g4.
" Mr. Tsunefiro Miyaska, Japanese Secretary of Legation,
said this morning in relation to the reported action of the
United States Consul-General at Shanghai, in delivering the
two Japanese into the hands of the Chinese authorities, that
it was entirely in conformity with the Japanese interpretation of
the authority and power of neutral consuls in a belligerent
country, and that should Japan suspect any Chinese subject,
residing in Japan of being openly hostile to the Japanese
government, or believed that justice warranted their arrest,
Japan would not recognize the jurisdiction of any neutral consul
over the suspect. The neutral consuls, while expected to exert
their friendly offices to prevent as far as possible any injustice
or undue severity being done, the native of one country while
in the land of the other, had no actual jurisdiction whatever.
Neither our consul's action or the summary punishment meted
out to the unfortunate Japanese by Chinese authorities, it was
said, occasioned any surprise at the Japanese Legation."
Incident of the China-Japan War. 427
A copy of the above statement was sent
by the Secretary to the United States Legation
at Peking as the view of the Japanese
Government on the subject. It justified the
action of the Secretary in ordering the delivery
to China of the two suspected Japanese, and
if Japan assented in that way to the delivery
of two of her subjects to China, there is no
reason from that standpoint why the Secretary
should be censured for doing what the Japanese
government virtually authorized. But neither
Japan nor the United States should assume to
upset the civil government of Shanghai.
But the Secretary took another precaution :
the United States Minister to China was absent
from Peking at the time, and the Secretary
•received from the Chinese Minister in
Washington a promise that no action should
be taken by his government in the case of the
suspected Japanese until the Minister returned
•to Peking, but the promise was violated, and
the Secretary rebukes the Chinese Minister in
the following language : —
^* Without assuming to question the lawful-
ness of this sentence, under the laws of war,
the decapitation of the two Japanese, I regret
to say that there is reason to believe that
the men were executed before the return of
•Col. Denby to Peking, and, therefore, in
428 China's Business Methods.
derogation of the voluntary promise which you
assured me your Government had made. If this
belief should prove to be well founded, it is
needless to point out to you the unfavorable
effect which the action of the Chinese authorities
cannot fail to produce on public opinion, not
only in this country but elsewhere/'
The reply of the Chinese Minister to the
Secretary's merited rebuke was evasive, but
it was too evident that the Minister's Govern-
ment was responsible for the promise and
violation of it. The Taotai of Shanghai made
to the Consul-General a somewhat similar
promise, and that too was violated with the
same disregard for truth.
At the time of this writing, there is
pending in the Mixed Court of the International
Settlement a case which illustrates the principle
discussed in this paper. There was a native
newspaper, known as the Supao^ published in
the Settlement and which had been arraigning
the Chinese government for its shortcomings and
insisting that the reigning family be driven out
of China. According to Chinese custom or
law the offense was classed as seditious, and
all those connected with the paper who could
be found were arrested at the instance of the
Government of China, and delivery to that
Government demanded. The authorities consti-
Incident of the China-Japan War. 429
tuting the Civil government of Shanghai
refused the demand and contended that the
prisoners should be tried in the Mixed Court
and punished in the International Settlement,
if found guilty. China appealed from the
civil authorities at Shanghai to the foreign
Ministers in her capital, but the latter sustained
the former, and the prisoners v\;^ill be tried in
the Mixed Court with a foreign official sitting
in that Court with the Chinese official. In
the Supao case the offense charged is the most
serious known to law, for here, on the soil of
China, some of her own subjects publish a
newspaper in which they advocated the over-
throw of their Emperor, and yet, so important
is the principle, that foreigners should govern
within the limits of the settlement, that China
cannot be allowed to exercise any authority
therein. The maintenance of such a principle,
in whatever aspect it may be viewed, is
absolutely essential to justice and safety at
Shanghai, and China has no grounds for com-
plaint so long as she adheres to her sanguinary
code and the infliction of barbarous punish-
ments.
Had the two Japanese been sent to the
Mixed Court of the International Settlement,
as was the intention of the Consul-General,
there would have been a full investigation
430 China's Business Methods.
under the eye of a consular official of tha
United States, and their guilt or innocence
would have been published to the world. That
question is now in doubt, so far as known by
a properly authorized investigation. But it is
due to the present Secretary of State for
the United States to write, that in refusing to
surrender the Supao prisoners to China he
has recognized a principle that goes directly to
personal safety and business prosperity at
Shanghai.
Note.
Proclamation of the Taotai of Shanghai during the
China-Japan War offering rewards for Japanese,
Liu, the Director of the Arsenal, Superintendent of Kiang-natt
Customs, temporal Taotai of Soo-Soon-tai of Military Matters,,
bearing the title of second rank, hereby offer rewards : —
As the Japanese, violating the treaty without reason,,
recklessly creating trouble, are hated by both God and men,,
and are our common enemy, Imperial Edict has been received
strictly ordering military commanders to concentrate strong
forces for the quick suppression of the Japanese invaders and for
the extermination of all the Japanese vessels, when met with,
entering any treaty ports, etc. It is remembered that the
districts along the sea coast, volunteer organizations have formed
under the order of high authorities. Now a telegram has been
received from the Viceroy instructing to offer rewards as
follows : —
I. — Those who have killed the enemy by thousands, and
gained a great victory, are given a reward of Tls. 100,000.
2. — A reward of Tls. 100,000 will be given to those who
have destroyed a Japanese ironclad of large size and a sum of
Incident of the China- Japan War. 431
Tls. 50,000 is offered to those who have captured the same
of small size.
3. — Any body of troop who have guarded an important
place carefully and have driven back the enemy will be
rewarded a sum of Tls. 30,000.
4. — A reward of Tls. 30,000 will be given to those who
have destroyed a Japanese man-of-war which is made of a
mercantile vessel.
5. — A reward of Tls. 20,000 will be given to those who
have destroyed a torpedo or torpedoes.
6. — Except ammunitions, all will be given as a reward to
those who have destroyed a vessel or vessels belonging to the enemy.
7. — A reward of Tls. 1,000 will be given to those who have
destroyed or taken possession of a boat of the enemy and have
killed the enemy over ten persons.
8. — A reward of Tls. 50 will be given to those who have
killed a Japanese invader, provided that the head has been
brought up with himself for reward.
9. — Generals and commanders have killed the enemy with
a promising result, beside a reward of money is given, will be
memorialized to the throne, if see fit, for special promotion.
INDEX.
PAGE
Administration of the Law
by Chinese Courts ... 68
Administrative System ... i
Adoption, Doctrine of ... 146
Alcock, Sir Rutherford ... 346,
388, 392
American Dollar 87
Amherst, Lord 326
Animal Transport, Cost of 191
Appeal, Right of 74
Bail ...
... 71
Banishment
... 74
Banks- s.i «..
... 92
Bank, Government
87,90
Bank Draft, Method of
buying ..; : 99
Baink- Failure, Punishment
for' ..i 100
Banking introduced ... 77
Beating 74
Bigamy i 145
Bills of Chinese Banks ... ' 98
Bills of Exchange 102
Blackburn Chamber of
Commerce 164
Board of PunishTnent
18
Revenue ... /16, 42, 44
/'
Rites ../
War /..
/
... 16
17, 23
PAGlt
Board of Works ...
18,19
Boat, Travelling by
190, 191
Book of Rites
16, 17
Boxer Uprising ...
... 24
"Boycotting"
III, 119
Bridge Building ...
... 186
Buddhism
... 4
Candai'een :.. ;.. .„ 87
Canton ... 11, 267, 317
Cash ... :.. 80, 8i^
Cash, Composition and
Weight 8a,
Cash, Want of Uniformity
in Value 80-
Censoi^ ... 18, 21, 22, 61.
Central Government, 13, 14, 24,.
25, 26, 38, '39, 42, 43, 53, 55,
56, 11, 59, 1^. 82, 85, 87, 94>
100, 104, 106, 107, 113, 115,
264, 268, 351
Central Government, An-
nual Revenue of ... 57
Chang Chi Tung 184
Changkow ... 49
Changtzin ,.\ \ 49
Chefoo Customs Tael ... 179
Chieti' :.: :.: ... 87
Chi-li ... 11,23,44,49,308
434
Index.
China- Japan War ... 333* 359»
360. 361, 375
China-Japan War, Incident
of 407
China-Japan War, Procla-
mation of Shanghai Taotai 430
Chinese Classics, the Basis
of all Chinese Law ... 60
Chinese Weights, Measures,
etc. 179
Chinkiang 49
Choukingj or Book of History 216
Christianity, Introduction
into China of 255
Civil Board 16
Coal 170
Commercial Code, Neces-
sity for 69
Commercial Integrity of
Chinese Merchants ... 318
Commercial Trend ... 151
Common Law of England
regarded as Model ... 75
Commissioner of Customs 55
Compradore ... 116, 386
Concubines ... 121, 122
Confucius 3, 125, 210, 269, 324
Writings of 3,4,5,
201, 216, 218
Consul, Qualifications for a 245
Consular System, British 243
Consuls and a Consular
System 240
Consuls, Objects of appoint-
ing ... ... ... 240
Consuls, Salaries of Ameri-
can and British ... 248
PAGE
Copper Coinage 77
Cotton « ... 176
„ Goods, Importation
of 158, 169
Cotton Mills 171
„ Export of Raw ... 163
Court of Revision 18
Criminal Jurisprudence, Dis-
tinction between Chinese
and Western 72
Currency, Suggestions Con-
cerning a Uniform ... 85
Cushing, Caleb ... 327, 330
Customs, Marriage, among
the Tartars 148
Customs, Marriage, of Tibet 149
Customs, Imperial Mari-
time, Revenue 157
Customs Service, Founda-
tion of ^ 390
D'Alembert
Dalny
Decapitation
Diderot
5
371
74
5
District Magistrate 8, 13, 32, 38
Divorce, when allowed ... 143
Dollar, American 87
„ Mexican ... 80, 81, 84
Dormant Partner not liable 67
Draft, Method of Buying a
Bank 99
Dynasty, Foundation of
Present ... .^ ... 124
East India Compaiiy ... 257
Educational System ... 201
Index.
435
PAGE
Emperor of China 7, 11, 13, 14,
15, 20, 21, 22, 28, 62, 63, 120,
331, 342, 344
Emperor, Kindred of, how
divided 124
Emperor, Wife of 120
Emperor's Household, Con-
stitution of 127
Eunuchs not allowed to
marry 131
Exchange, Bills of 102
Exports, Value of ... 158; ^67
Extra-territoriality ... 219
Failure of Bank, Punish-
ment for 100
Family Law 129
„ Responsibility ... 67
Fen 87
Ferries 186
Feudal System 2
"Fiat Money" ... ... 80
Filipinos and Self-govern-
ment 368
Foreign (Consular Authority
in China 222
Foreign Trade of China,
Annual Value 156
Foreign Trade of China
compared with Japan ... 155
Fukien 49> 3i7
Gama, Vasco da 257
Gold * ... 86
Gold and Silver current
in China 83
PAGE
Gold Standard, C'hina with-
out a 85
Golitsyn, Prince Basil ... 284
Government Bank... 87, 90
„ „ Objects
ofa 90
Government of China ... 7
„ Tribal ... 2
Governor 10, 13
Grain Intendent lo
Grand Canal 19
„ Council ... 14, 15, 20
„ Secretariat ... 14
Guilds 104
„ Jurisdiction of ... no
„ Laws and Regula-
tions of 109, III
Guilds, Officers of^ 107
„ Origin of 105
„ Source of Revenue
for Supporting 108^
Han l^
Hanlin College 14
Hart, Sir Robert 85, 151, 269,.
271, 343, 393, 402
Hastings, Warren 230, 231, 234
Heir Apparent, Appoint-
ment of 347
Hides and Skins 177
Hien Tsu, Founder of
Present Dynasty ... 124
Honan 44
Hongkong 283, 303
Huai District ... 49, 50, 133
Hue, Abbe ... 201, 255, 272^
436
Index.
PAGE
Imperial Audience, First ... 331
„ Concubines ... 121
„ Harem 16
„ Household ... 120
„ Maritime Customs,
Annual Receipts of ... 56
Imperial Maritime Customs
42, 55, 56, 81, 178
Imports, Value of ... 157, 167
Incident of the China-
Japan War 407
Infanticide 76, 146
„ Proclamation
Against 76
Inns, Chinese 188
Integrity of Chinese Mer-
chants 318
Intendant of Circuit ... 9
Intercourse between United
States and China ... 327
Interior Trade Routes ... 184
Jamieson, George ... 45, 46, 48,
50, 53
Jefferson, Thomas ... 27
Kerosene Oil, Import of 161, 170
Kiangsi 51
Kiangsu 44
Kiaouchau 293, 311
Koreinga 125, 126
Kublai Khan 6, 78, 122, 127, 146
Kuping Tael 87
Land Tax ... 37, 43, 52, 181
„ Amount of ... 181
Land Tenure 2^
PAGE
Laws-Courts
... 60
Laws of China
... 60
^^Zg^y James
... 140
Li
... 87
Li Hung Chang 41, 184, 288
Li Ki, or Book of Rites ... 217
Likin Tax 52
„ Amount of Re-
venue from 55
Likin Tax, Method of Col-
lecting 53
Li Kuei 60
LunyUf or Book of Philo-
sophical Conversations 212
Macao 256, 257
Mace 87
Mackay Treaty ... 151, 153
Maclellan, W. J 377
Manchuria ... 23, 289, 305, 308,
314,315,336, 367,369
Manchus 29, 30
Marco Polo... 78, 122, 127,
146, 148, 149
Marriage, Age suitable for
Males and Females ... 131
Marriage Customs among
the Tartars 148
Marriage Customs of Tibet 149
Marriage, Method of arrang-
ing a 136
Marriage, When Prohibited 131,
132
Martin, R. M 79
„ W. A. P 323
Measures and Weights,
Chinese ... 179
Index.
437
PAGE
[Memorializing the Emperor ii,
^3
Meng-tze or Mencius ... 212
^letals and Minerals ... i77
^, Importation of ... 160
Mexican Dollar ... 80, 81, 84
Military Tenure of Land ... 99
Minerals and Metals ... I77
Ming Dynasty 79
Mint, Establishment of a... ^^
Missionaries 254
Mixed Court at Shanghai 228
Mixed Court Rules ... 225
Moguls 79
Mollendorff, P. G. von, 131, 133,
134, 136, 144, 148
Money 77
„ Paper ... 77, 78
„ Foreign, permitted
throughout the Empi
re 83
oVloney, Different Forms of 83
^longolia
... 23
Morrison, Robert ...
... 257
Mortgage of Land...
... 33
Mourning
... 133
Muddy Flat, Battle of
... 391
Nankeo
... 185
Nanking
... II
,, Treaty of
... 383
Napier, Lord
... 326
Native Banks
56, 84
Ningpo Guild Riot
... 112
Nobility, Perpetual Titles
of 125
J^^orth-China Herald, First
issued ... , 385
PAGE
Officials, Salaries of Chinese 44
Oil, Kerosene ... 161, 170
"Open Door" Doctrine •.. 321
Opium War 330
Pacific Ocean — The Arena 273
Paper Money ... 77, 78
Parkes, Sir Harry ... 251
Partner, Dormant, not liable 67
Partnerships ... 66, 67
Patterson, William ... 276
Pawnshops 115
Peking 19, 21, 23, 24, 181, 188,
256, 267, 290, 305, 373
Perpetual Titles of Nobility 125
Perry, Commodore 273, 332
Petitions to the Emperor 353
Philippine Islands ... 238, 277,
283, 368
Piece Goods Guild, Shang-
hai 54
Ping 82
Policy 323, 376
Politics ... , 3
Polyandry 146
Pound Sterling ... 87, 89
Port Arthur 307, 371, 373
Prefect ... , 9
Promissory Notes , 102
Protectorate 318
Protestantism 5
Protestant Missionaries ... 5
Provincial Judge 10
„ Organization ... 12
„ Treasurer ... 10
Punishment, Board of ... 18
„ Four Kinds of 74
438
Index.
PAGE
Railroads 267
"Red Deed" 33
Religion 3
Religious Indifference ... 5
Remusat, M. Abel, on
Meng-tze and Confucius 214
Responsibility of Family ... 67
Revenue, Board of 16, 42, 44
Ricci, Matteo 256
Rice 160
Richthofen, Baron ... 178
Right of Appeal 74
Rites, Board of 16
„ Book of ... 16, 17
Roads 185
Salaries of Chinese Officials 44
Salt Administration, System
of 48
Salt, A Government Mono-
poly 50
Salt Business, Mode of
Working 50
Salt Commissioner ... 10
„ Cost of 48
„ Retail Price 49
„ Sale of 49
„ Tax 48, 52
,, Total Revenue from 53
San-dze-king 203
Schools, Chinese 202
Sesamum Seed, Export of 163
Shanghai 220, 249, 250, 330, 377
„ Capture of ... 381
„ Customs Tael ... 179
„ Early History ... 380
PAGE
Shanghai Opened to Trade 382
„ Municipal Council 398
Shantung 44, 311
Shansi 44, 48, 93, 178, 255;
„ Bankers, Rules of... 94
Shells used as Money ... 83
^he-king, or Book of Verses 217
Shenking 181
Shimonoseki, Treaty of ... 333,
341, 358, 359, 362
SiKiangor West River ... 235
Silk, Export of 103.
„ Trade 175
Silver and Gold Current in
China 83.
Sing-an 255
Skins and Hides ... ... 177
Slavery 75
Soochow 54
Sources of Revenue ... 42
Sphere of Influence ... 318-
State Religion 3
Statute of Frauds 64
„ Limitations ... 64
Strangulation ... 74, 76-
Strategical Positions ... 230-
Stravvbraid ... ... ... 1 77
Succession to Property ... 36-
Sugar 169
Suggestions Concerning a
Uniform Currency ... 85
Supao Case ... 428
Sycee hi
„ Shoe, Value of ... 82
Sze-chou, or Four Classical
Books 205
Szechuen 44, 48-
Index.
439
PAGK
Tael ... 8i, 87, 88, 89
„ Haikuan, Weight and
Value 81
Tael, Kuping 87
„ The Standard of Value 81
Taft, Governor 368
Ta-hio, or Book of the
Grand Study 205
Taotai 9
Taiping Rebellion... 52, 387
Taku 49
Taxes paid in Grain 47, 52
Tax-levying, Examples of 45, 46
Tchoung-youngf or Book of
the Invariable Centre ... 208
Tchun-thsioUy or Book of
vSpring and Autumn ... 218
Tea, Export of 163
„ Trade I73
Thibet 23, 230, 231, 232, 233
Tientsin 181, 188
„ Customs Tael ... I79
T'ing Choa 146
Tipao 32, 69
Titles, Perpetual, of Nobi-
lity 125
Torture, not permissable
and permissable ... 73
Torture to extort Confes-
sion 72, 73, 74
Trade Routes ... 184, 192-200
„ Union 113
Transferring Land, Method
of , ... 31
Travelling by Boat 190, 191
Tribal Government ... 2
Tsung-li Yamen ... 20, 21
PAGE
United States 27, 152, 222, 238,
241, ^k, 363, 368
Vagliani, Pere 256
Vasco da Gama 257
Viceroy ... 10, 24, 25, 74, 82. 96
Village Headman 32
Wade, Sir Thomas...
Wai Wu Pu
Wangugan-Che
War, Board of
Water Freight, Cost of
Weights and
Chinese ...
Weihaiwei ...
Wei-yen
... 391
21,85
... 5
17, 23
... 192
Measures,
179
283, 303, 366
53
Western Nations in China 301
West River 235
"White Deed" 33
William the Conqueror ... 29
Williams, S. Wells, 103, 137, 254
Woosung Forts, Capture
of 381
Works, Board of ... 18, 19
Writings of Confucius 3, 4, 5,
201, 216, 218
Xavier, St. Francis 256, 324
Yangchow ...
Yangtsze Compact
Valley .
Yin
... 51
... 24
234, 303,
312, 317
... 50
Y'King, or Book of Changes 216
Yule, Sir Henry 128, 149, 150
Yunnan 309
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